Government decision on company opt outs welcome

Lawspeed, the recruitment law specialist, welcomes the governmentís decision last week to retain the company opt out for contractors and umbrella companies.

Adrian Marlowe, Managing Director, said ìas architects of the opt out in 2002 we were concerned that the Government was losing site of the advantages that the opt out brings to the table and the reasons for the opt out in the first place. The freedom that commercial organisations have to choose how to operate, when it comes to regulations supposedly designed for their own protection, is a key principle, and I am very glad that the Government has listened to the representations we put forward during the recent consultation process.

I am also glad that various trade organisations chose to reflect our concerns and continue to recognise the benefit that the opt out brings. Retention of the opt out helps protect contractors tax status and is a point we refer to when representing our contractor clients to HMRC. In addition it simplifies an agencyís administration, thus leaving all parties satisfied.î

Crucially the Government did not remove the right to opt out from umbrella companies. Adrian continued ìthere was a real fear the umbrella companies would be singled out. This would have been wrong in our view since it would have represented an interference into certain models for which there is a genuine commercial justification and left those organisations at disadvantage. This welcome decision leaves umbrellas on a level playing field with other types of incorporated organisations.î