JSA, specialist accountancy services provider to the freelance market, has responded to the article from Adrian Marlowe, advising on how recruiters can protect themselves against the risk of umbrella companies failing.

“In response to the article that appeared yesterday on your website and in a newsletter, the directors of JSA would like to point out that, back in 2009, we recognised the fact that auditing our business wasn’t just about compliance and that in order for JSA to protect all of our customers, we needed to financially restructure our business to ensure that we would be in a stronger position to support all of our customers.

“To this end, Adrian Marlowe, managing director of Lawspeed, is correct in his comments with regard to the financial viability of umbrella companies leaving both the recruitment agency and the freelancers in a vulnerable position should the worst happen.

“However, to prevent exactly this kind of situation occurring, JSA took the appropriate action and by entering into a debt restructuring, with HMRC’s full backing and that of industry bodies such as APSCo, Professional Passport and PCG, we were able to ensure that all of our contractors will be paid on time in the normal way and with no need to worry. HMRC would not have agreed to back the company voluntary agreement (CVA) if they had any doubts at all about our financial situation or our future trading ability.

“Our business is now very strong and financially buoyant. Contrary to the figures being referred to in some circles, JSA has already paid off nearly 50% of the historic debt approved by the creditors in the CVA on or ahead of schedule and our remaining outstanding liabilities to HMRC in the CVA are £2.2m, the repayment of which over five years is fully factored into the business plan approved in the CVA process.  We can reassure agencies and contractors that every contractor will be paid as normal.

“The new ownership and new management team which came into place at the time of the CVA was a key and conditional element behind the creditors’ approval of the plan for the business’ future viability and successful continuation of trade. As directors of the company, chairman Andrew Goodman – with a 25-year history of successfully building private and publicly-backed staffing businesses – managing director Rick Flood and finance director Andy Yates are fully committed to looking after and securing the future of JSA’s creditors, first and foremost.

“It is essential to highlight that in entering a CVA the new directors of JSA are guided by law to act in the best interest of creditors at all times, rather than in the interests of shareholders or in pursuit of any other agenda.

“Obviously the recession has had an impact on service providers in general and it is very sad to hear that other companies have hit troubled times, but JSA were well organised and had the foresight to put measures in place to ensure that the business would stay financially robust. Contractors and agencies face no risk at all by signing up with or continuing to use JSA’s services.

“In conclusion, we have always been audited by Professional Passport and that relationship includes a process whereby Professional Passport are fully advised of our status including our performance in the CVA. While we have never been audited by Lawspeed, we would welcome an explanation as to how their Provider audit addresses this question and, if appropriate, will take a closer look at their standard if it further reassures our contractors and agency partners.”