UK Umbrella Company Tax Crackdown Called Misplaced, Burdensome

The UK’s proposed law to tackle tax avoidance in the temporary-labor market is unnecessarily burdensome and wouldn’t solve the problem, businesses say.

A July proposal to make companies and recruiters jointly liable for unpaid payroll taxes by so-called umbrella companies—agencies used by businesses to pay temporary workers—would lead companies to scrutinize their labor supply chains more and prompt them to consider different ways of hiring and paying people, according to industry and tax professionals.

His Majesty’s Revenue and Customs aims to address “unscrupulous behavior” by noncompliant umbrella companies, according to its proposal.

Businesses are already doing a “great deal of ...