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Umbrella company problem with expenses (+£25K owed)

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    #21
    Originally posted by kennygratts View Post
    What it looks like the umbrella company has done is actually directly pay me at the 40p a mile for the incorrect mileage that I entered. This has gone in as a separate payment added to my pay every month. No questions asked.
    No, the umbrella has taken 40p/mile from the gross amount available to pay you & forwarded this to you tax free

    For example:
    1. You work 20 days at £400 – the umbrella has a £8,000 pool to work with.
    2. The Umbrella then refunds your expenses, £4,000 in your first month, reducing the pool to £4,000
    3. The Umbrella takes their cut, plus Employers NI etc., this reduces the pool to say £3,000
    4. You pay tax on the remaining pool i.e. £3,000

    Assuming you claimed 120,000 miles:
    First 10,000 @40p plus 110,000 @25p = £31,500
    Less what you might have been able to claim (24,000 miles)
    First 10,000 @40p plus 14,000 @25p = £7,500

    So you may have received between £24,000 and £31,500 tax free depending if expenses are payable, you need to account for your personal tax liability.

    You may also have to recalculate Employers contributions as well, but this is where it gets difficult, some umbrellas have been found to be playing fast & loose with steps 2 & 3 above. Calculating Employers contributions before reimbursing expenses, then pocketing the difference. You need professional advice here

    Originally posted by kennygratts View Post
    So effectively I am a permanent employee of the umbrella company. On this basis until I get the umbrella company to provide a specific breakdown of the figures then to all extent and purpose I would owe them the overpaid amount, or am I incorrect?
    You're a permie on a zero hours contract, if you don't work, they don't have to pay you. This is why not resigning or being made redundant gives you the opperunity to mitigate things by taking another contract.

    Originally posted by kennygratts View Post
    Still no idea how HMRC would fit into this ... I am guessing the umbrella company have offset this against their PAYE and NIC?

    At best you've underpaid tax, at worst you've committed fraud & underpaid tax & you still have no idea why HMRC would be interested

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      #22
      Originally posted by Magpie252 View Post
      You're a permie on a zero hours contract, if you don't work, they don't have to pay you. This is why not resigning or being made redundant gives you the opperunity to mitigate things by taking another contract.
      Not necessarily true - under an overarching contract of employment, you'd still be entitled to pay between engagements, holiday pay etc.
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        #23
        Originally posted by TheFaQQer View Post
        Not necessarily true - under an overarching contract of employment, you'd still be entitled to pay between engagements, holiday pay etc.
        True, but last time I used an umbrella they bundled holiday pay in to your take home etc., didn't pay one month when the invoice/payment was late.

        This was the easiest way I could think to describe the situation without getting technical

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          #24
          Originally posted by kennygratts View Post
          I can claim travel/accommodation... the workplace was temporary as was a short-term contract so that isn't in dispute.

          I am simply asking if I have any legal redress against the umbrella company as they were effectively my employer, or is negligence on there behalf something that I can do nothing about.

          Likewise what my options are legally/financially.

          Rather than providing flippant comments and making a joke of it TheFaQQer, f you can't actual provide something useful keep the comments to yourself.
          Where's Frank Big Bird when you need him?

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            #25
            Originally posted by Magpie252 View Post
            Assuming you claimed 120,000 miles:
            First 10,000 @40p plus 110,000 @25p = £31,500
            Less what you might have been able to claim (24,000 miles)
            First 10,000 @40p plus 14,000 @25p = £7,500

            So you may have received between £24,000 and £31,500 tax free depending if expenses are payable, you need to account for your personal tax liability.
            It could be more. First off, the rate should be 45p/mile but OP seems to think it's 40p. If the umbrella were asleep on the job then maybe they managed to pay 40p (or 45p) beyond the 10,000 miles threshold as well. Say 100k miles *extra* @ 45p, that's £45k paid as expenses that should have been paid as salary. In that light £25k tax/NI isn't so outrageous as a ballpark figure.

            OP needs the umbrella to put the claim in writing, with clear justification for the figures. One way to do this (I guess) would be for the umbrella to re-issue the year's pay slips with corrected figures.

            Comment


              #26
              Originally posted by Magpie252 View Post
              You have either had the good sense or luck to post this on one of the Professional forums, we have to treat you ‘nice’, if you want flippant reply’s try posting in General, then take cover.

              As FaQQer has correctly pointed out & I alluded too, expenses are not payable for single contracts due to this effectively being your ‘normal’ place of work.

              Have you resigned from the Umbrella, or have they issued you with a P45, if you haven’t resigned or been made redundant you could get another contract then expenses become payable for both.

              If the Umbrella made you redundant by issuing you with a P45 there is a slim chance that you could argue that the intention was to continue contracting.

              If you resigned (to claim JSA for example) then there never was the intention to continue contracting & expenses are not payable.

              Remember you don’t owe £25K, you owe the tax payable on the £25K (i.e. what was refunded tax free.), there’s an argument to be had as too if you owe this to the Umbrella or to HMRC directly.

              I’d be inclined to try and get the Umbrella to agree to a refund of the Employers NI contributions due, then deal with the rest direct with HMRC, if your open and honest with them from the start

              I assume that this income crosses 2 tax years?, I’d contact HMRC asap and be open that that you may have underpaid tax in the previous year and explain the situation, if you’re lucky they’ll change your tax code to recoup the money or agree a payment plan

              You should be able to sort this year’s problems by completing a Self Assessment next April & paying the tax due then.

              Have a look here for what happens when you can’t pay HMRC on time HM Revenue & Customs: Problems paying HMRC: advice for businesses, individuals and tax agents
              Lisa posted the other day, http://forums.contractoruk.com/umbre...-travel-7.html there was a reply from HMRC around this point, which was, as usual clear as mud. Intention is the key here... So if the OP had the intention to work on multiple contracts the fact he couldn't is not his or the Umbrellas fault.
              Last edited by moggy; 17 September 2014, 09:24.

              Comment


                #27
                Originally posted by moggy View Post
                Lisa posted a link the other day, can't be bothered to search.. "call NLUK" but there was a reply from HMRC around this point, which was, as usual clear as mud. Intention is the key here... So if the OP had the intention to work on multiple contracts the fact he couldn't is not his or the Umbrellas fault.
                That link related to whether once you give notice, you have to stop claiming expenses. That used to be the case - once you resign from the umbrella, the location wasn't seen as temporary any more - but no longer the case.

                If you only ever have one gig, then you cannot claim travel and subsistence because the location can never have been a temporary one.
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                  #28
                  Originally posted by moggy View Post
                  Lisa posted the other day, http://forums.contractoruk.com/umbre...-travel-7.html there was a reply from HMRC around this point, which was, as usual clear as mud. Intention is the key here... So if the OP had the intention to work on multiple contracts the fact he couldn't is not his or the Umbrellas fault.
                  No she didn't:

                  Originally posted by LisaContractorUmbrella View Post
                  Not to my knowledge they haven't - if a worker only has a single employment through an umbrella company it's considered a permanent workplace and therefore mileage, subsistence and accommodation can't be claimed as those expenses are only allowable where the workplace is temporary
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                    #29
                    Originally posted by kennygratts View Post
                    What it looks like the umbrella company has done is actually directly pay me at the 40p a mile for the incorrect mileage that I entered. This has gone in as a separate payment added to my pay every month. No questions asked.
                    You seem to be saying you were paid this mileage IN ADDITION to your daily rate.

                    So, 2,500 miles claimed per week = £1,000 per week.

                    Was there really no point at which you though to yourself "I seem to be being paid net rather more than my gross pay. I wonder if this is right?".

                    However, there is a possible (but unlikely) case where your arrangements with the party you were actually doing the work for were "rate + travel".

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                      #30
                      Originally posted by ASB View Post
                      Was there really no point at which you though to yourself "I seem to be being paid net rather more than my gross pay. I wonder if this is right?".
                      As the OP has stated he has no savings, he was probably too busy spending his windfall

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