Around 700,000 flexible workers are being urged to check their payslips after HMRC issued a new warning over payroll fraud.
New guidance published by HMRC warns agency and temporary workers that even if a payslip appears genuine, the Income Tax and National Insurance shown as deducted by the umbrella company or agency they’re operating through may not actually have been paid to HMRC.
Workers are being told to compare their payslips with the information held in their HMRC Personal Tax Account or HMRC app.
HMRC has also identified warning signs of potential payslip fraud, including unexpected changes to take-home pay, different employer names appearing on payslips, being moved frequently between payroll companies, unexplained ‘admin adjustments’ and unexpectedly losing access to an online payslip portal.
The tax authority warns that missing or incorrect payments could affect a worker’s tax bill, tax refunds, Universal Credit, statutory sick pay, maternity and paternity pay and even their future State Pension.
The warning could be particularly relevant to the UK’s estimated 700,000 umbrella workers, who are employed and paid through PAYE by umbrella companies while carrying out assignments for end clients. HMRC previously estimated that at least 275,000 umbrella workers had been engaged at some point by umbrella companies that failed to comply with their tax obligations in 2022/23.
Seb Maley, CEO of Qdos – an insurance provider for the flexible workforce said: “HMRC’s new warning is an important reminder for anyone working via an umbrella company. A payslip showing that tax and National Insurance have been deducted doesn’t necessarily prove that money has actually reached HMRC.
“Most umbrella companies operate compliantly, but the scale of the sector means hundreds of thousands of workers need to know what to look for – and following recent reforms in the sector, recruiters and businesses engaging umbrella companies should also take note.
“HMRC has now set out warning signs, from unexplained changes in take-home pay to suddenly finding a different employer name on your payslip or being moved between payroll companies. Flexible workers should get into the habit of checking their payslip against their HMRC account.
If the income and deductions don’t match, investigate it immediately rather than assuming everything happening behind the scenes is correct. This isn’t just about tax – or potential unexpected tax bills in due course. HMRC warns that problems with your payroll record could ultimately affect everything from tax refunds and Universal Credit to sick pay, parental pay and your State Pension.”
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