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Can my LTD company be a Umbrella?

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    Can my LTD company be a Umbrella?

    Hi,

    I have a quick question and I hope this group being the fountain of
    knowledge might know the answer.

    I have been contracting via a Ltd company since June 2005 and I decided
    to expand our business by employing a few full time staff at the start of the
    year.

    At the moment I have a full time employee who I am struggling to find
    work for and I am trying to outsource to cover costs whilst project
    work is slow.

    Our employe has been offered contract work but the agency has pulled the
    contract at the last minute as he is not a sole trader with a Limited
    Company & he stated that he does not work via a Umbrella company. The
    agency stated that they don't work with employees from other Ltd
    companies as its the agency policy.

    Going forward, can we state that we are an umbrella company as we are
    processing his PAYE wages, tax, and providing insurances etc, and we
    have employed the person full time for nearly a year now, so we are not
    trying to do anything untoward.

    What else do I need to provide as a umbrella company? The last thing I
    want to do is make my employee redundant, but I am in a position
    where I can't afford to continue paying wages for much longer.

    Thanks in advance,

    K

    #2
    Sounds like you want to act as a normal consultancy to me (outsourcing your staff on client projects) than an umbrella company. I don't know if there's a legal definition of what an umbrella company is but somehow I doubt going back to the agency and saying "hey, we're an umbrella company now" will be believed.

    Have you tried approaching agencies that are willing to engage consultants through a company that they aren't a director and/or shareholder of that aren't umbrellas per se?

    Comment


      #3
      Yeah

      Hi,

      Thanks for the reply, we do have contracts with other IT resellers where we provide resource for work, however some agencies simply state that the contractor must be a director or via umbrella company.

      Going forward if our employee states we are an umbrella company will this work? I have asked the agency for clarification on this policy but have't had anything back as yet.

      Cheers,

      K



      Originally posted by TheCyclingProgrammer View Post
      Sounds like you want to act as a normal consultancy to me (outsourcing your staff on client projects) than an umbrella company. I don't know if there's a legal definition of what an umbrella company is but somehow I doubt going back to the agency and saying "hey, we're an umbrella company now" will be believed.

      Have you tried approaching agencies that are willing to engage consultants through a company that they aren't a director and/or shareholder of that aren't umbrellas per se?

      Comment


        #4
        You can try but claiming you are something you aren't seems dishonest at best, fraudulent at worst.

        Why don't you negotiate with the agency and find out why they are insisting on this policy? I can't see what difference it makes to them.

        Comment


          #5
          Originally posted by TheCyclingProgrammer View Post
          You can try but claiming you are something you aren't seems dishonest at best, fraudulent at worst.

          Why don't you negotiate with the agency and find out why they are insisting on this policy? I can't see what difference it makes to them.
          I have asked the agency why they have this policy, they are going to come back to me but they have said that if my company provides a resource who is not a director to an agency then then it complicates the issue legally as they are dealing wth another company and not the contractor directly. When I said that if I state we are an umbrella they said that they only deal with 3 or 4 umbrella companies who are on the PSL. They have asked for my employee to setup a ltd company and to pay me via direct debit!

          I've never had this issue before, so I am keen to find out if this is common as the simple fact is that if I can't cover the employee's wages when work is slow then I will have to let him go, something I don't want to do but maybe forced to do.

          It all sounds a little suspect?

          Thanks,

          K

          Comment


            #6
            Hcl, not really as simple as "claiming" you are an umbrella, you would need to understand the processes of making payment to a contractor and how deductions are made, legalities of an overarching contract of employment, statutory employment rights, holiday pay to name but a few, however if the agency run a closed PSL then you would have little chance of getting past that anyway.

            Can't see a way round it other than what you suggested...

            Comment


              #7
              Don't let Terminology Confuse You

              I believe that this is more to do with the agency having a PSL (Preferred Supplier List) and not wanting to allow individuals to circumvent that.

              If this worker is a permanent employee of your business and you ultimately have the responsibility to pay them where they work for you or someone else then you are no different than any other employer. However, it is highly likely that if you do manage to convince the agency to allow you to subcontract to them and provide a worker, that you will be treated as an intermediary that brings you within the scope of the revised agency legislation. This means that your worker must be paid PAYE and not on a self employed basis.

              Don't get confused with terminology, but seek professional advice.

              Comment


                #8
                Would it not be simplest just to adjust the worker's rate and refer them to an umbrella company? You move your employer responsibilities on to the umbrella company and you will be in a position to work with any agency you choose
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                Comment


                  #9
                  Temporary or Permanent Workplace

                  Originally posted by LisaContractorUmbrella View Post
                  Would it not be simplest just to adjust the worker's rate and refer them to an umbrella company? You move your employer responsibilities on to the umbrella company and you will be in a position to work with any agency you choose
                  Think the problem with this worker transferring his workers to an Umbrella Company for agency work is that he would have to engage in a TUPE transfer for this assignment, only to have them transferred back when he has enough work to keep them busy in his own consultancy.

                  The potential for a second assignment is also greatly reduced so the workplace will be permanent not temporary.

                  I agree that a short term strategy, assuming all parties agree, is for the worker to go on the books of an Umbrella on the Agency PSL.

                  The question was "can my company be an umbrella", think the answer is as soon as they hire their staff to and agency or end user client, they more or less are. Even worse they may be considered an Employment Business (Agency).

                  Comment

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