The Service Providers Association (SPA), which represents companies who provide employment, payroll, tax, accountancy, administrative support and advice to the professional contractor workforce, today announced the launch of the first ever dedicated code of conduct to encompass the broad range of businesses that operate in the service providers sector, including contractor umbrella organisations and businesses providing support services to contractor limited companies.
Service Providers Association
The Service Providers Association (SPA) was formed in 2008 and includes three of the industry’s leading companies; Giant, Brookson and Parasol. Association members offer professional services to tens of thousands of contractors across a range of sectors including IT, healthcare, oil and gas, energy and finance.
A Service Providers Association spokesperson comments: “SPA was founded to represent the interests of professional freelance workers and encourage professionalism and transparency throughout the service providers sector. The code of conduct we are launching today represents a vitally important step forward in this process and is significantly, supported by HMRC. We look forward to continuing our work on behalf of freelance workers while building Government and regulators understanding of our industry.”
The service providers sector is worth approximately £100 billion and is estimated to have grown by as much as 20% between 1998 and 2008.
Code of conduct
The code of conduct outlines the strict standards and legal guidelines that apply to the service providers sector, designed to encourage best practice across the industry. Compliance will allow reputable service providers to demonstrate their commitment to ethical operating practices, while reassuring contractors and users of contracting services that they are dealing with professional organisations.
As part of the code of conduct process SPA members will also undergo an independent review from one of the ‘big four’ accountancy practices, with the review documentation being voluntarily submitted to HMRC - an act of open-book accounting and independent assessment that demonstrates their commitment to principled and transparent business practices.
Support from HMRC, REC and APSCo
A spokesperson from HMRC says “HMRC welcomes moves by some Service Providers in the temporary labour market to self-regulate. A commitment to effective self-regulation and transparency in dealing with HMRC is a positive step in reducing compliance burdens and HMRC is pleased to give advice on its interpretation of the law to those wishing to a devise a regulatory framework.
The Service Providers Association's Codes of Conduct, on which HMRC has provided advice, is a welcome example of self-regulation in practice.”
The REC has also welcomed the proposal from the Service Providers Association (SPA) that umbrella companies who are in their membership will have to sign up to a rigorous code of conduct. Says Kevin Green, Chief Executive of the REC, "This is a giant step in the right direction, we and many of the recruitment businesses we represent have been very wary about the practices of some organisations in this space." Green continues, "Not only will SPA members sign up to the code but it is robustly reviewed by an independent third party who will forward on to the HMRC the outcomes of their assessment. Once these audits have been completed it will certainly provide improved confidence for end user clients and REC members. However we still advise REC members to conduct their own due diligence before entering any contractual agreement with a third party.”
The move has also been supported by Ann Swain, Chief Executive of APSCo who said "We are delighted to support the launch of the Service Providers Association’s Code of Conduct. This robust Code, and its support from HMRC, demonstrates clearly why APSCo members have confidence in using the services of SPA members."
Over the past few years HMRC have taken a dim view of the contractor services providers sector, enacting legislation such as IR35 and the Managed Service Companies Legislation. They've also prospoed to introduce legislation to counter what they refer to as income shifting in addition to starting consultation regarding expense claims by umbrella company contractors. So this support by HMRC for this code of conduct is a very welcome one. Contractors looking to select a service provider will be able to look for the SPA badge of approval - knowing that such a firm adheres to strict industry standards.