In a written statement to MPs, Nigel Huddleston, financial secretary to the Treasury, said: ‘The government is minded to introduce a statutory due diligence regime for businesses that use umbrella companies and will continue to engage with the recruitment industry and other key stakeholders on the detail of this.’

There will be a penalties regime for non-compliance to clamp down on abuse of the labour supply chain.

In addition, HMRC will publish new guidance to support workers and businesses that use umbrella companies. This will include an online pay checking tool.