The Freelancer & Contractor Services Association (FCSA) launched a campaign against government plans to transfer tax liabilities
Under Joint and Several Liability rules, recruitment agencies become legally responsible for unpaid taxes within their umbrella supply chain.
In an official statement published in the FCSA Case for Licensing vs Liability-Shifting, the trade association argued that liability-shifting fails to stop payroll tax evasion.
Chris Bryce, Chief Executive, FCSA, who provided the statement, suggested the most effective way to “clean up” the umbrella market is a “properly designed Payroll Intermediary Licensing regime” rather than shifting tax liability onto employment businesses.
“That is the case FCSA has made consistently since the Budget 2024 umbrella proposals, and it remains our position as the detail of reform is worked through,” said Bryce.
Bryce believes moving payroll responsibility and tax liability onto employment businesses “spreads the problem rather than solving it”:
The Budget 2024 proposals would place obligations on a very large base of agencies to address failings that sit with a comparatively small number of non-compliant umbrellas.
In my view, this expands HMRC’s enforcement burden instead of shrinking it. Chasing thousands of employment businesses is harder than regulating and licensing the umbrella providers directly.
Instead, the FCSA demands mandatory government licensing for all payroll intermediaries. Under this model, umbrella businesses must hold an official licence to trade legally in the UK.
The end goal being non-compliant payroll providers would lose their licence immediately, protecting workers and public funds directly.
Is statutory licensing too little, too late?
Joint and several liability rules are already active, leaving recruitment agencies exposed to sudden tax claims. Meanwhile, official oversight under the Fair Work Agency will not cover umbrella companies until 2027. Calling for licensing now highlights years of slow legislative progress while financial risk lands on recruiters.
Why licensing impacts the FCSA business model
This lobbying campaign touches the core business model of the FCSA and its primary paying customers. The FCSA relies on fee-paying umbrella members for its operational revenue. Its main value proposition to recruitment agencies is risk reduction through voluntary accreditation badges.
If recruitment agencies face strict tax liabilities, voluntary badges may no longer provide sufficient legal shelter. Recruiters might abandon umbrella providers altogether or demand insurable guarantees.
By campaigning for licensing, the FCSA hopes to embed its standards into national law. This protects its umbrella members while retaining recruiter trust across the contingent labour market.
💬Recruiters, what are your thoughts on this? Share your views in the comments and via The Freelance Informer LinkedIn channel.
