Among the standout announcements is the formal commitment to launch the FWA, which will tackle low pay, job insecurity and poor conditions. For umbrella companies and recruitment businesses, this is a long-overdue step towards a consistent, regulated sector, something FCSA has been advocating for over a decade. If implemented well, the FWA could finally provide a credible framework to root out payroll pirates in our sector, while giving compliant providers the recognition they deserve.

But it’s not all positive. Efforts to reduce public sector reliance on contractors, particularly in departments like Defra and the FCDO, may cause concern for members who supply into government contracts. Efficiency savings driven by “insourcing” digital and professional expertise should be closely watched. What we need is a balanced approach, where contingent workers remain a valued and flexible part of the solution, not a line item to be cut.

HMRC’s resource uplift is perhaps the most significant move. With £1.7 billion earmarked over four years to fund 5,500 new compliance staff and 2,400 debt management roles, the government is doubling down on enforcement. For compliant umbrella firms, this could help level the playing field, particularly if HMRC uses its expanded capacity to focus on non-compliant operators and payroll tax abuse.

FCSA will continue to push for smarter enforcement: using tools like veriPAYE and Diligence Hub to empower end-clients and recruiters with real-time visibility, while also lobbying for proportionate and well-targeted regulatory frameworks. We also remain strong advocates for a statutory licensing scheme, something the FWA could deliver with the right political will.

The message is very clear: compliance is no longer optional. The businesses that invest in getting it right, whether through accreditation, transparent processes, or technology like veriPAYE and Diligence Hub, are those best positioned to thrive in this new environment.

As ever, we’ll continue to represent our members and the wider sector, ensuring our voice is heard where it matters most.

The post Spending Review 2025: What It Means for Compliance and the Contingent Workforce appeared first on FCSA.

• The employer’s reference number will remain with the Umbrella company,
• but the top/primary agency (and if no agency, the end client) will remain accountable should a failing in tax liability occur. This will be a strict liability with no statutory excuse.

This suggested approach will be confirmed on ‘L-day’ which we are led to believe is mid-July, as always we will keep you posted.

The post Umbrella Regulation Update: FCSA Meets with HMRC and HMT appeared first on FCSA.

This naming-and-shaming round, part of the wider Plan for Change, is the latest attempt to reinforce the Government’s message: underpaying workers will not be tolerated.

At FCSA, we welcome this enforcement action. Workers deserve to be paid correctly and on time. The vast majority of employers and service providers in our sector work hard to meet their legal obligations, and those who don’t should face meaningful consequences.

But this announcement also raises an important question: are we doing enough to prevent these failures before they happen?

The rise in National Minimum and Living Wage rates is a significant step in improving workers’ living standards. Yet as the numbers show, confusion or poor practice around pay calculations remains widespread.

That’s why robust, proactive compliance infrastructure is critical. At FCSA, we believe the future of fair pay lies not just in penalties after the fact, but in better systems, clearer guidance, and industry-led solutions.

Our own verification tools veriPAYE and Diligence Hub exist to support recruiters and umbrella companies in getting payroll right the first time. By creating real-time visibility and streamlining due diligence, these systems help ensure the rules aren’t just followed—they’re understood and implemented correctly across the supply chain.

A strong economy needs a strong compliance culture. Enforcement is a necessary tool, but prevention should be the goal. When workers are paid fairly and transparently, everyone benefits.

The post £7.4 Million returned to underpaid workers appeared first on FCSA.

Background

Ms Djalo is employed by a private facilities management company, OCS Limited (“OCS”). OCS provides services to the Ministry of Justice (“MOJ”) in accordance with an agreement between the two organisations (the “Contract”). Ms Djalo works as a cleaner at the MOJ’s Petty France site, where she has worked since 2009.

Ms Djalo asserted that, as a result of her being paid less than those staff directly employed by the MOJ who were performing comparable work, the MOJ had indirectly discriminated against her. She argued that the MOJ had applied a provision, criterion or practice (“PCP”) that resulted in lower pay for contract workers. She asserted that this disparity disproportionately affected black and minority ethnic (“BME”) staff. She also claimed that the MOJ had the contractual power to uplift her pay to the London Living Wage (“LLW”) under clause 60.1(17) of the Contract.

Tribunal and Appeal Decisions

The Employment Tribunal struck out the claim, finding that sections 19 and 41 of the Equality Act 2010 (“EqA”) did not permit a contract worker to bring a discrimination claim against a principal based on differences in pay with the principal’s own employees.

After Ms Djalo’s appeal was allowed to proceed to a full hearing, but before that hearing took place, the Court of Appeal (“CA”) handed down its judgment in the case of The Royal Parks Ltd v Boohene and others [2024] EWCA Civ 583 (“Royal Parks”). That judgment confirmed that section 41 EqA did not allow for a principal to face a discrimination claim which related to pay under a contract worker’s contract with their own employer.

Ms Djalo argued that the MOJ’s contractual power to uplift pay distinguished her case from Royal Parks. She also relied on the EU Race Equality Directive (No. 2000/43), and asserted that the single source principle (as outlined in Lawrence v Regent Office Care Ltd and others (Case C-320/00) [2003] ICR 1092) should be applied.

However, the EAT rejected these arguments. It held that:

• The MOJ’s alleged contractual power to uplift pay could not be established. Even if this had been established, it would not form a material distinction from Royal Parks or permit this case to be brought into the scope of section 41 EqA.
• On the above basis, the single source principle did not apply here.
• Ms Djalo could not satisfy the criteria for a section 19 EqA claim, though this was unnecessary in any event given the EAT’s findings related to section 41 EqA.
• With regards to the European Convention on Human Rights (ECHR), the claim did not fall within the ambit of Article 8 or Article 1 of Protocol 1 of the and thus Article 14 (protection from discrimination) was not engaged.

Key Takeaways

This case, following closely on the heels of Royal Parks, reaffirms the narrow scope of section 41 EqA and illustrates the legal hurdles faced by outsourced workers seeking parity with directly employed staff.

Though the EAT did not consider the single source argument or Article 14 to be applicable on the facts of this case, this may form the basis of future appeals.

The post Section 41 Equality Act 2010 – Strike Out of Indirect Race Discrimination Claim Brought By Contract Worker Upheld by EAT appeared first on FCSA.

Every employer in the UK must undertake a right to work check to secure a statutory excuse to an illegal working civil penalty being imposed. If imposed, an illegal working civil penalty could be up to £60,000 per worker working illegally, so undertaking compliant right to work checks is very important.

For self-employed workers, at present, UKVI right to work guidance confirms that it is only employers that hold a sponsor licence who need to undertake right to work checks, meaning employers who do not hold a sponsor licence don’t need to undertake a right to work check on self-employed workers. Guidance states:

“Where the worker is not your direct employee (for example, if they’re self-employed), you are not required to establish a statutory excuse. However, you must still carry out these checks (and retain evidence you have done so) if you are a sponsor licence holder and are sponsoring the worker to ensure compliance with your sponsor duties.”

On Sunday 30 March 2025, Yvette Cooper confirmed that the requirement to undertake a compliant right to work check will be extended, and that any company who engages self-employed contractors to carry out work on their behalf must carry out a right to work check on the casual worker. If a right to work check isn’t undertaken and the contractor is found to be illegally working, the company could then be liable to an illegal working civil penalty.

During her interview with the BBC, Yvette Cooper confirmed that the current right to work system is not impacting the gig economy (the labour market consisting of casual work and short-term contracts). She is hoping that further right to work obligations, combined with increased immigration enforcement and sponsorship compliance visits, will help to prevent illegal working and reduce promises of illegal work from criminal gangs who arrange illegal border crossings.

The extension of the right to work system is currently going through parliament via the Border Security, Asylum and Immigration Bill. The Bill has passed through the House of Commons and is currently being reviewed by the House of Lords. At present, we do not know exactly when the bill will be passed and will become law, but it is important that companies engaging contractors in the UK look out for further information relating to the implementation of the right to work changes involving casual workers.

The post Right to Work changes relating to casual workers appeared first on FCSA.

The Recruitment Network is a leading recruitment community and events provider, bringing together thousands of recruitment professionals from across the UK and internationally. With a strong emphasis on peer-to-peer support, knowledge-sharing, and professional development, The Recruitment Network aligns with FCSA’s commitment to raising standards and promoting collaboration across the supply chain.

FCSA Chief Executive Chris Bryce commented:

“I’m delighted to welcome The Recruitment Network as a Business Partner. Their commitment to fostering genuine engagement within the recruitment industry resonates with our values at FCSA. As we continue to champion best practice and drive conversations that matter, partnerships like this strengthen our ability to serve the whole sector.”

This new partnership offers FCSA more opportunities to connect directly with a broad range of recruiters and participate in The Recruitment Network’s established programme of meetups and events across the UK and via it’s platform TRN World .

Gordon Stoddart, TRN CEO and Co-Founder:

‘We’re very excited to partner with FCSA and ensure that out Members have access to the compliance frameworks and best practice that FCSA focuses on. All our Members work incredibly hard to build profitable, sustainable and reputable businesses that outperform the market and being a truly compliant business is critical. We are looking forward to work with the FCSA team alongside our other TRN Partners  to drive best practice’

–

About FCSA

FCSA is the UK’s leading membership body for umbrella employers, contractor accountants, and CIS payroll providers. Through its accreditation, resources, and advocacy work, FCSA promotes compliance, transparency, and fairness in the temporary labour market.

About The Recruitment Network

The Recruitment Network is the UK’s fastest growing independent recruitment community. It brings together ambitious recruitment entrepreneurs,, advisors and business leaders, and provides local and national networking opportunities, industry updates, and best practice advice to recruitment professionals at all stages of their careers.

The post The Recruitment Network joins FCSA as a Business Partner appeared first on FCSA.

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That’s why more contractor payroll companies are taking a serious look at something new – not to replace what they do best, but to build something stronger around it.

The Hidden Giant: Bureau Payroll

You might be surprised to learn that while umbrella firms support around 660,000 contractors, the UK’s payroll bureau market quietly services nearly 12 million employees. That’s right – millions of workers across SMEs, accountancy firms, and professional services are paid through payroll bureau providers every month. It’s a sector built on stability and scale, and increasingly, it’s calling out for the kind of expertise umbrella firms already have in spades: compliance, speed, and digital systems.

So why the shift now? It’s simple. Employers want fewer systems, more flexibility, and someone who can handle everything – contractors, temps, and permanent staff – all under one roof. Umbrella firms that expand their service offering can meet that demand head-on.

Same Team, New Market

My Digital Payroll, the latest product from cloud-based payroll software provider My Digital, was built to support this shift. It’s designed specifically for contractor payroll businesses looking to step into bureau services – without the cost, confusion, or operational headache.

With this new platform, payroll teams can seamlessly switch between umbrella and bureau models. There’s no jumping between systems, no rekeying of data – just one interface, one login, and all payroll types in one place. And thanks to built-in AI features that automate data imports and reduce manual inputs, the software doesn’t just work well – it saves time, too.

“With My Digital Payroll, we seamlessly expanded our service offering to include payroll bureau, driving growth and diversification,” said Brendan D’Souza, CFO at Bar2. “Expanding our services was a great decision to offset risk and create new revenue

streams, and My Digital’s all-in-one system enabled us to run an efficient operation, seamlessly managing both umbrella payroll and payroll bureau services. Our staff can now effortlessly handle all payroll types within the same trusted system. With My Digital’s innovative technology and reliable support, we feel confident in scaling our business for the future.”

A Logical Next Step

The appeal is clear: by adding bureau services, contractor payroll firms can reduce reliance on unpredictable temp volumes and create new, recurring revenue streams. It’s not about reinventing the wheel – it’s about steering it in a smarter direction.

“Over the last decade, we’ve secured our position as a payroll software leader in the temporary workforce space,” said Daniel Moss, CEO of My Digital. “The launch of My Digital Payroll marks the beginning of our expansion into the general payroll market and is a major milestone in our growth journey. Our team has done a fantastic job delivering this product, and many of our existing customers are already seeing the value of broadening their services.”

Contractor payroll firms have the tech, the people, and the experience. What they need now is a bigger playground. My Digital Payroll gives them the tools – and the confidence – to take that next step.

The post From Temp to Timeless: Why Umbrella Firms Are Looking Into Bureau appeared first on FCSA.

Facts of the case

Dr Mantides carried out contracts via his PSC with both Royal Berkshire Hospital (“RBH”) and Medway Maritime Hospital (“MMH”). HMRC made a determination that his contracts with both hospitals fell inside IR35. Dr Mantides appealed to the First-tier Tax Tribunal (“FTT”).

In determining whether Dr Mantides was inside or outside IR35, the FTT had to imagine that his PSC didn’t exist and that he had entered into a contract directly with the hospitals. The FTT had to decide what would have been the terms of those hypothetical contracts.

The FTT concluded that if Dr Mantides had entered into a contract directly with MMH, then he would not have been deemed to be an employee of MMH for income tax and national insurance purposes. That is to say, his contract with MMH was found to be outside IR35. HMRC attempted to appeal but they submitted their application too late.

However, in relation to RBH, the FTT concluded that Dr Mantides was a deemed employee, i.e his contract with RBH was inside IR35. One of the main reasons for this was because the FTT decided that in the hypothetical contract with RBH (unlike the hypothetical contract with MMH), Dr Mantides would have been required to give one week’s notice to terminate the contract and RBH would have been under an obligation to use reasonable endeavours to provide 10 half day sessions of work to Dr Mantides each week.

Dr Mantides appealed the FTT’s judgment in relation to RBH to the Upper-tier Tax Tribunal (“UT”). The UT found fault in the FTT’s reasoning and set the FTT’s decision aside.  Specifically, the UT found that the evidence available to the FTT did not support the FTT’s conclusion that Dr Mantides would have been required to give one week’s notice to terminate the contract, or that RBH had an obligation to provide him with a minimum amount of work each week. However, the UT then went on to consider the hypothetical contract between Dr Mantides and RBH again itself, and still came to the ultimate conclusion that Dr Mantides’s contract with RBH was inside IR35.

The UT concluded that Dr Mantides was required to provide personal service to RBH and he was not permitted to send a substitute.  The UT also found that there was a sufficient framework of control and mutuality of obligation (in the PGMOL sense of the term; see further below). The UT decided that other factors were either neutral (in terms of the degree of actual control) or pointed only weakly towards employment (Dr Mantides’s use of the hospital’s equipment and staff) or self-employment (Dr Mantides bearing his own costs, including insurance, and a lack of employee benefits such as holiday pay).

PGMOL

The decision in Dr Mantides’s case had been put on hold pending a final decision from the Supreme Court in HMRC v Professional Game Match Officials Ltd [2024] (the “PGMOL” case), which related to whether football referees were deemed employees. The UT wanted to hear the Supreme Court’s decision in PGMOL before reaching a decision in relation to Dr Mantides.

The PGMOL case principally concerned mutuality of obligation and control. The takeaways from that case were:

• A watering down of the importance of mutuality of obligation, meaning that it can no longer be seen as a determining factor of employment status. Specifically, the Supreme Court referred to mutuality of obligation as a ‘wage-work bargain’, meaning a requirement on one party to work and a requirement on the other party to pay for that work. In that sense, mutuality of obligation exists in almost every case where a person performs services and receives payment for those services.
• Control must be considered holistically. In the case of an expert professional, there may only be minimal control exercised over them, but this does not necessarily mean that they are truly self-employed.

In light of PGMOL, the UT in Dr Mantides’s case decided that:

• Although RBH did not exercise tight control over what Mr Mantides did (because he was an experienced professional doctor), the hospital was entitled to exercise sufficient control to establish employment.
• Even though RBH did not have an absolute obligation to provide 10 half day sessions of work to Dr Mantides per week, the UT decided that the hospital was under a duty to use reasonable endeavours to provide those sessions during the period of the contract, and that, when taken with the overarching requirement for Dr Mantides to do work and RBH to pay him for that work, this was sufficient to satisfy the requirement for mutuality of obligation as watered down by PGMOL.

Key takeaways

Taken together with the PGMOL judgment, the Mantides case demonstrates the increased difficulties in challenging inside IR35 findings, especially when seeking to rely on a lack of mutuality of obligation.

The case also arguably creates an element of confusion in circumstances where employment status cases are already highly fact-sensitive and nuanced, as two nearly identical hypothetical contracts (with MMH and RBH) were subject to different findings by the FTT, although it is worth noting that this may not have been the case had HMRC submitted its appeal in relation to the MMH contract in time.

Finally, as umbrella companies, agencies and self-employed contractors will already know, the law in relation to employment status claims is constantly evolving. Who knows whether the UT may have reached a different conclusion in relation to Dr Mantides if the PGMOL case had not been heard yet. It is vital that contractors, agencies, umbrella companies and end-user clients stay up-to-date with case law developments and seek advice if they are unsure how to apply those developments in practice when determining a person’s employment status.

The post Doctor found to be inside IR35 despite no obligation on hospital to provide work and no notice period appeared first on FCSA.

What is the List?

Essentially, it’s a public register where HMRC names companies and schemes it believes are involved in promoting or facilitating tax avoidance. These schemes often involve complex arrangements, such as paying individuals minimum wage through payroll while disguising the rest of their income as untaxed loans, advances, or other similar payments. HMRC explicitly warns that these schemes don’t work as advertised and using them can lead to significant unexpected tax bills, plus interest and penalties. Inclusion on the list signifies HMRC’s view that the scheme is non-compliant; it does not mean HMRC has ‘approved’ any scheme not on the list.

Growing Numbers and Regular Updates

The list isn’t static. HMRC updates it regularly, adding new schemes and promoters as their investigations conclude. Recent figures suggest the list now contains well over 150 named entities. The rate of additions highlights HMRC’s ongoing crackdown; updates often occur multiple times a month. In some cases, HMRC adds further entries for already-listed firms under different regulations, like the Promoters of Tax Avoidance Schemes (POTAS) regime, strengthening their action against persistent promoters.

Why It Matters to You

For contractors, freelancers, and businesses engaging payroll providers or umbrella companies, this list is a vital resource. Engaging with a named scheme, even unknowingly, can have severe financial consequences down the line. Promoters often use misleading marketing, claiming HMRC approval or guaranteeing higher take-home pay. Remember, if an arrangement sounds too good to be true, it probably is. Always perform due diligence and if you suspect you might be involved in a scheme, or are unsure about a provider, contact HMRC directly for guidance. Staying informed helps protect you from costly future tax liabilities.

The post Shining a Light: HMRC’s Tax Avoidance Scheme List appeared first on FCSA.