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HMR&C targets 'Dubious Contractor Expense Claims'

Some Umbrella Companies are ‘Misleading’ UK Contractors.

A recent announcement from the Government means that there has never been a more important time to give careful consideration to your choice of umbrella company.

In a consultation document published by HMR&C in July 2008, non-compliant Umbrella Companies were brought heavily under fire. The blatant abuse of rules surrounding expense claims has put not just Umbrella Companies but contractors and employment agencies firmly under the Government spotlight.

In their own words, the Government is ‘particularly concerned at evidence that Umbrella Companies and employment agencies…are encouraging their workers to claim expenses which were not genuinely incurred or for which no relief is due’

The 49 page consultation document cites many quotes from Umbrella Company websites that appear to urge their employees to claim expenses that they are not entitled to. For example:

‘What makes XXX so unique from other management companies? XXX has a very generous dispensation scheme approved by the Inland Revenue.’

HMR&C have been extremely thorough in their research for this consultation document and their opinions of non-compliant schemes are totally damning. For example:

‘One Umbrella Company advertises on its website that its workers will take home a minimum of 85% of their gross contract value. It is likely that this company is encouraging its workers to claim for expenses that they have not incurred’.

At ContractorUmbrella, we have always maintained that the only things that really separates Umbrella Companies is the level of service you receive and their respective charges. If your expense claims are legitimate and compliant, then your take home pay will be exactly the same whichever Umbrella Company you choose.

Contractors and recruiters should focus on:

  • 1. Are customer service levels guaranteed?
  • 2. Will you be paid even if the Umbrella Company isn’t paid?
  • 3. Does the Umbrella Company hold any professional accreditations?
  • 4. Will you have a dedicated Account Manager?
  • 5. Is the Umbrella Company established and reputable?

Our free guide to expenses is an invaluable source of information to what you can legitimately claim using an Umbrella Company.

If you have any further questions about expenses or contracting in general, please either call our new client services helpdesk on 01206 591 000 or e-mail