Umbrella companies will this week be invited to sign a charter detailing 10 actions that all payroll providers should work by.
As HMRC does not ‘approve’ umbrella companies, the charter is the industry’s way of identifying those providers who take a ‘best practice’ approach to the taxman’s regulations.
Signatories of the charter, which is hoped to offer assurance to contractors and other prospective clients, commit to being ‘straight talking’ about how their umbrella operates.
In particular, they agree to answer any queries from contractors “honestly and transparently,” once their name appears on the charter’s website, ‘All umbrella companies are equal.’
“You, as contractors, will be able to judge each umbrella company on its merits and have the reassurance that any questions you have will be answered honestly and openly,” the site says.
“The intention…is to raise awareness for legitimate umbrella companies and provide contractors with an assurance that they are in safe hands.”
Umbrellas behind the charter added that they have “no profit-making” motive, but instead wish to create a “level playing field” for payroll firms following their proliferation over the past ten years.