Cash-basis of umbrella costing Tax-Free income

[adubya]

What answer are you looking for?

From the original post I think that's obvious.

[VelcroPower]

Well, I was on the phone to HMRC yesterday, and they confirmed that its down to how the company processes their accounts, whether they take the invoice into account when its placed (Accrual) or when its filled (Cash-based), for the company's tax year, and would be irrelevant when I'm actually paid.
Is this not correct?

Edit: But thanks for the support

I'm fairly sure that's not correct. You should know better than to listen to HMRC

That invoice is not your money - it's the Umbrella's. That's how they can take margin, employer nic & expenses (back in the day) out of their invoice value prior to calculating your gross pay. If the Umbrella company made a snafu and you didn't get paid for 2 months (despite them being paid earlier) the date of the payment of wages to you still determines the tax period in which it falls.

This is all on the basis that you are engaged with a "normal" umbrella company of course

[WTFH]

Which umbrella company are you using?

[Lance]

This is all on the basis that you are engaged with a "normal" umbrella company of course

It must be a normal umbrella surely.
Nobody would use an umbrella with an 85% take home and then ring HMRC asking about their accounting practises would they?
Would they?




EDIT: Admin can we get emoji of a hand with a rubber glove being donned?

[bobbygee]

What answer are you looking for?

Good question!

I would like to know if its reasonable for an umbrella to calculate on an Accrual basis, or to do so if its in their employee's interest, and if its the standard or not. (from what I've understood its a requisite for large companies anyway)

Edit: I'm using Contractor Umbrella, which I got from here. (form an orderly queue for a referral mention )

[VelcroPower]

Good question!

I would like to know if its reasonable for an umbrella to calculate on an Accrual basis, or to do so if its in their employee's interest, and if its the standard or not. (from what I've understood its a requisite for large companies anyway)

1) A company will act in its shareholders interests first and its employees last, ie. there's a reason NMW and Health & Safety legislation exists.
2) It honestly makes no difference to you as an employee, but I don't think I can explain it any more differently that I already have.

[bobbygee]

1) A company will act in its shareholders interests first and its employees last, ie. there's a reason NMW and Health & Safety legislation exists.
2) It honestly makes no difference to you as an employee, but I don't think I can explain it any more differently that I already have.

Ok, so I'll ask you the same question I asked HMRC, what would stop someone from earning 44k, and having the invoices 'paid' over 4 years, paying no income tax, while living like Marlon Brando in Vietnam?

[WTFH]

Ok, so I'll ask you the same question I asked HMRC, what would stop someone from earning 44k, and having the invoices 'paid' over 4 years, paying no income tax, while living like Marlon Brando in Vietnam?

If that's the question you asked HMRC, I'm not surprised with the answer they gave you!

If you are working through an umbrella company, they will pay you like an employee. There will be a monthly payment run, and that's when you get paid.
It's not the date on the invoice they raise to the client.
As for your question about Marlon Brando, the answer is related to the terms & conditions you have with your Umbrella company.

[VelcroPower]

Ok, so I'll ask you the same question I asked HMRC, what would stop someone from earning 44k, and having the invoices 'paid' over 4 years, paying no income tax, while living like Marlon Brando in Vietnam?

That doesn't make any sense, which is probably why HMRC gave you a duff answer.

If any of us earn a total of £44k over a 4 year period we won't pay tax, unless we've got a rubbish tax code, so absolutely nothing would stop that, other than no umbrella company would do it anyway.

As you can imagine, however, it's a fairly unlikely scenario.

You're still not getting the fact that as an employee the date on those invoices will have no bearing at all on when you're taxed. The period when you are paid your wages by the Umbrella for that work does.

[northernladuk]

You're still not getting the fact that as an employee the date on those invoices will have no bearing at all on when you're taxed. The period when you are paid your wages by the Umbrella for that work does.

Or when the Umbrella get's paid ....