10th December, 2021 I’m often educated by my law trained business partner as to…
WTT + SafeRec: delivering unparalleled transparency
As the SafeRec certification process moves into its third month since launch, I’ve been reflecting on the part that WTT has and continues to play in SafeRec’s shared mission to bring unparalleled transparency to the industry.
It is well known that WTT acts for many contractors who have unwittingly been marketed tax avoidance arrangements in the past. We’ve seen first-hand the life-altering impact that these schemes can have on workers, along with the financial and reputational damage impacting organisations that operate within the same supply chain. I for one, never want to see people dragged into these scenarios again and so when Seb approached us to establish a partnership centring around creating greater accountability and transparency for umbrellas, we jumped at the chance.
What people don’t necessarily see is the three years of energy, passion and hard work that has got Seb and Jule to this stage, sustained only by their genuine belief that the contractor market can do more to protect and future-proof itself.
So, what’s new? Why might having the SafeRec certification process ten years ago have prevented so many of our clients from falling victim to these arrangements? For me, there are three key parts to the certification process that achieves this.
Stage 1- Operational Compliance
Each umbrella that joins the certification program first undergoes a complete annual review of all pertinent policies including right-to-work procedures, holiday pay, modern slavery, anti-tax avoidance etc. and a Legal review of employment contract terms used by the umbrella. This is reinforced with ongoing spot checks conducted periodically, to ensure they are up to scratch on recent case law and prevailing practice, matched against our approval criteria, developed over the last year.
This stage is conducted by WTT Legal, a regulated law firm and independent arbiter of the umbrella itself. Our Head of Supply Chain Compliance, Chris Mattingly, manages these audits with his team and conducts a thorough initial inspection. Importantly, this stage also includes a background check into the directors and controlling parties behind the umbrella and is verified against our extensive and ever-growing database of historic and current contractor tax avoidance arrangements. Once the initial review is complete, an interview is held to go deeper into flagged issues. Only once we are content that everything is as it should be does the umbrella pass Stage 1.
Stage 2- Real-time audit
Stage 1 is perhaps nothing new, but it is an important pre-requisite to Stages 2 and 3 which are, for me, the game changers. Stage 2 sees the umbrella onboarded with the SafeRec platform, where the payslips issued by the umbrella are audited at source, directly from the payroll provider.
All too often, we see umbrellas providing an ‘enhanced offering’ where a proportion of their workers will be on compliant PAYE with a second proportion being paid via tax-motivated schemes. Checking a proportion of payslips will never be good enough. Whether you’re a worker, an agency or an end-hirer, always make sure any umbrella you work with has been subject to an audit of all payslips for workers being supplied to you, every month. Not quarterly, not bi-annually – every month. We’ve seen it all when it comes to ways that scheme operators navigate around periodic audits. Only by being involved in every payment that goes out the door can you mitigate this.
Stage 3- Ongoing verification
For me, this is the big one.
Despite every payslip being checked, there will always be bad actors that artificially generate payslips to avoid detection. Closing the loop here is key.
This is where WTT and SafeRec act in tandem to get even more invasive on the umbrella. Every month, WTT holds a screen share call with the umbrella where we ask them to download their RTI summaries directly from the payroll software and upload them to a newly shared folder which they are granted access to on the call. We visually verify the downloads and then we ask them to navigate to their HMRC government gateway account where we record the amount of tax paid and confirm that there are no outstanding amounts due.
At this stage, we have to give credit to those umbrellas who are currently certified for granting this level of access. It shows very clearly how committed they are to ensuring transparency.
From here, SafeRec validates the RTI submissions and the tax-paid figure to ensure alignment meaning only those umbrellas that pay the correct amount of tax on each and every verified pay run can receive a clean bill of health.
Despite all of the above, umbrellas can still seek to mitigate this by only passing a proportion of their workers through the process. So SafeRec closes the loop further.
Every month a reconciliation report is sent to the umbrella’s agencies, again with no input from the umbrellas themselves, so that the agency can independently verify that workers
supplied to them via the umbrella are accounted for. If there are any outstanding, a red flag is raised and the umbrella is suspended while a review takes place.
In all of the above we have;
1) A full operational compliance check to make sure the worker and the rest of the supply chain are treated fairly and in line with legislation.
2) Real-time auditing of all of payslips
3) Closing of the loop via an independent report back to agencies.
By utilising SafeRec-certified umbrellas, agencies are able to mitigate tax risk, prove compliance with legislation to HMRC and their clients and protect their workers- for free.
WTT are genuinely proud to be playing a part in the ever-increasing movement towards compliance and to be auditing some of the most forward-thinking umbrellas in the market.
Anything that stops people like our clients from falling into the same traps that they’ve been victim to in the past gets my vote.
So massive plaudits go to SafeRec and the pioneering umbrellas that have opened themselves up to this process. Here’s to hoping many more will be confident to do the same, creating lasting change in an industry that so desperately needs it.
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