Umbrella company crackdown continues

Multiple-choice questions. In order to be awarded CPD units you must answer the following five random questions correctly. If you fail the test, please reread the article before attempting the questions again.

When do the new rules on umbrella companies come into force?

6 April 2026

They are already in force

6 April 2027

1 January 2026

Whom do the new rules apply to?

Neither UK-based agencies nor end clients

Both UK-based agencies and end clients

End clients only

UK-based agencies only

When was the first set of new IR35 rules introduced?

2023

2021

1999

2005

What does the government hope to achieve with the latest set of rules?

To reduce the tax gap caused by fraudulent activities

All the other answers are correct

To encourage contractors to become sole traders

To encourage end clients to make contractors employees

Which of the following statements is true? Statement 1, individual workers will generally be liable to pay more tax. Statement 2, the changes will improve compliance with existing tax regulations

Statement 1

Statement 2

Both statements

Neither statement

What is a typical umbrella company?

An intermediary between a UK-based company and a provider of non-UK labour

One used by a company to handle tax and HR for all its workers, both temporary and permanent

All the other answers are correct

A third-party employer that supplies temporary labour and processes workers' pay

Under the draft legislation, who is legally responsible for ensuring a worker's PAYE is properly accounted for by the umbrella company?

It depends on the turnover of the end client

The umbrella company

The end client

It depends on the turnover of the umbrella company

Why might some agencies that act as intermediaries between umbrella companies and end clients decide to become non-resident companies?

Both to avoid coming within the scope of the new legislation and to make it easier to recruit cheaper labour overseas

To avoid coming within the scope of the new legislation

None of the other answers is correct

To make it easier to recruit cheaper labour overseas

According to HMRC, what could be a sign of a fraudulent umbrella company?

All the other answers are correct

Unusual company names

Foreign national directors with no experience of the UK labour supply sector

Unrelated business activities listed on Companies House

How might HMRC penalise a business that knew or should have known an umbrella company was acting fraudulently?

It will be barred from using umbrella companies for five years

It will be denied the right to recover VAT as input tax

None of the other answers is correct

It will be prosecuted

1 unit

Umbrella company crackdown continues

When do the new rules on umbrella companies come into force?

Whom do the new rules apply to?

When was the first set of new IR35 rules introduced?

What does the government hope to achieve with the latest set of rules?

Which of the following statements is true? Statement 1, individual workers will generally be liable to pay more tax. Statement 2, the changes will improve compliance with existing tax regulations

What is a typical umbrella company?

Under the draft legislation, who is legally responsible for ensuring a worker's PAYE is properly accounted for by the umbrella company?

Why might some agencies that act as intermediaries between umbrella companies and end clients decide to become non-resident companies?

According to HMRC, what could be a sign of a fraudulent umbrella company?

How might HMRC penalise a business that knew or should have known an umbrella company was acting fraudulently?

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