Choosing an Umbrella Company?

(3 minutes to read)

The claims and promises made by Umbrella Companies vary enormously; most of them will sound too good to be true…and they usually are! Lets take a look at the usual marketing ploys used to entice new contractors...

Promises of protection from an HMRC investigation

No Umbrella Company can offer this despite their claims. At the end of the day it is your tax liability and HMRC will pursue you to reclaim any underpaid tax! The penalties and interest would also be payable by you, regardless of the fact that you were given bad advice.

Why would a company need to offer protection if it’s giving sound advice? Contractor Umbrella is sister company to a specialist firm of accountants, Dolan Accountancy, so you can be sure of the advice we give you. Even if HMRC decide to contact you, you will know that you won’t have claimed anything untoward.

Give me a call on 01206 591 000 or email sophie.lewis@contractorumbrella.com.

“HMRC Approved” Umbrella Company

HMRC doesn’t ‘approve’ Umbrella Companies. HMRC will grant an Umbrella Company a dispensation and this is where the misleading advertising begins.

IR35 compliant… it’s irrelevant!

The IR35 rules don’t apply to contractors operating through an Umbrella Company as your payments are processed through PAYE. Although the claim of ‘IR35 compliant’ sounds impressive, it’s completely pointless!

Act as ‘Employer’

According to new legislation Umbrella Companies must act as an employer. This means that you should sign a Contract of Employment and that you should receive the Statutory payments such as SMP, SSP, SAP and SPP; any umbrella company that makes deductions from your earnings to cover these payments is not fulfilling their legal responsibilities and should be avoided. The same applies to umbrella companies that make deductions to cover any liabilities under the Agency Worker Regulations.

Agency Recommended Umbrella Company

Some Umbrella Companies are known for paying referral fees in return for recruitment consultants sending their details onto new contractors.

Although there is nothing wrong with this in principle, it is increasingly becoming the case of who will pay the most for referrals, rather than passing on a company’s details because the consultant knows you will get good service from them.

It is also becoming more common that Umbrella Companies will form a contract with the agency, in exchange for referral fees, which locks them into passing on all their contractors solely onto that particular company. The contractor is given no choice; if they want a contract with certain agencies they will have to use the agency’s ‘preferred’ Umbrella Company, regardless of service levels or personal preference. This practise is restrictive and is rarely used to improve the contractor’s lot, more to line the agency’s pockets.If after reading this page you have any questions or would just like to make a general enquiry, please contact a member of our team on 01206 591 000 or email us at info@contractorumbrella.com.

Still thinking about if you should join Dolan Accountancy?

Give us a call on 01206 591 000 or email jessica@jvbconsultancy.co.uk

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