SPA – umbrella compliance checks

Umbrella compliance checks

SPA is an independent audit and accreditation that validates service provider (umbrella company) compliance as suitable partners to work in the supply chain. Umbrella companies offer payroll and candidate payment services to recruitment businesses and hirers and employ or otherwise engage temporary workers and contractors.

There are two options:

SPA MSC

This is an audit that is limited to checking the level of MSC tax risk offered by a service provider. A report is provided to the party requesting the audit, for example a hirer or agency, and if the risk level is low, the audited umbrella is permitted to use the MSC Spa logo for the period covered by the audit (normally one year but subject to terms that ensure continuing compliance).

The benefit to agencies and hirers.

Some tax legislation, for example the Managed Service Company legislation (MSC), provides for tax debts to be transferred to hirer and agency directors. This poses a threat that is unnecessary in the supply chain. The report assists with the risk/benefit assessment of working with a particular umbrella company, providing clarity on operations relevant to MSC tax risk.

SPA

The service provider accreditation goes several steps further than SPA MSC. The enhanced audit checks compliance with employment, agency worker legislation and risk relevant to the agency tax rules.

Whilst HMRC regularly targets tax avoidance schemes, and some tax legislation places agencies at risk of tax claims, workers can bring other types of claim.  For example for non payment of holiday pay, underpayment of wages, and employment rights infringements. These can expose hirers and agencies to both financial risk and reputational damage.

SPA is particularly useful for businesses creating a PSL of compliant umbrella companies. SPA is subject to the same rules concerning maintaining compliance during the period of the accreditation.

Advantage of Lawspeed SPA

Whilst some umbrella companies rely on trade association membership to validate their credentials, Lawspeed SPA MSC and SPA accreditation is entirely independent

  • no membership requirement so no conflict of interest
  • assesses operations company by company, 
  • avoids confusion over use of group identities and trading names
  • validates day to day operations claimed by the audited company 
  • SPA MSC tests relevant MSC tax risk
  • SPA also tests employment, agency worker legislation compliance and agency tax rules risk

If you wish to book an audit for your own business or an umbrella company you wish to work with, please contact us.

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