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Discovery – Exposure – Reporting – Defence

As we see it there are four stages to dealing with umbrella noncompliance in a corporation’s supply chain.

  • Discovery – Compliance procedures, staff vigilance and payslip checks will all help a corporation discover noncompliance in its supply chain.
  • Exposure – Should a corporation discover a noncompliant umbrella in its supply chain the following questions need to be answered:
  1. How long has it worked with the noncompliant umbrella?
  2. How many workers does it have with them past and present?
  3. How much money will HMRC be looking for?

For example, a worker with an annual contract value of £65,000 or £5,416 per month could generate an exposure or HMRC shortfall of £20,554.00

  • Reporting – Tempting as it may be to ignore or downplay the seriousness of a discovery making a timely disclosure to HMRC is an important element of a corporation’s defence.

“In order to encourage relevant bodies to disclose wrongdoing, timely self-reporting will be viewed as an indicator that a relevant body has reasonable procedures in place.” HMRC

  • Defence – In order to present a defence should HMRC decide to prosecute, evidence of a corporation’s efforts to meet the “reasonable measures” threshold as set out in the 6 guiding principles of HMRC guidance will need to be produced.
  1. Risk assessment
  2. Proportionality of risk-based prevention procedures
  3. Top level commitment
  4. Due diligence
  5. Communication (including training)
  6. Monitoring and review

The Criminal Finance Act 2017 and the corporate criminal offence of failure to prevent the criminal facilitation of tax evasion is a reverse burden of proof offence. In other words, the corporation is guilty until it can prove it has taken the required reasonable steps to prevent an offence.

As an independent 3rd party compliance service Umbrella Check Limited can help you meet the more demanding aspects of the guidance in particular training and monitoring.

It isn’t enough just to discover an offence you need to evidence a culture of compliance that meets the “reasonable measures” threshold.