Draft legislation on umbrella companies etc

[peanuts]

I recently sent a consultation email to the revenue regarding the proposed legislation complaining that all that will happen is that contractors will leave umbrella's and open a Ltd company in order to continue to claim expenses under the 24 month rule surprisingly I got the following reply:

' Thank you for your message. We do not believe that umbrella companies are caught by the draft legislation in the consultation document. Our intention is only to capture Managed Service Companies, by which we mean Composites and Managed Personal Service Companies, with the measures described in the document. However, if you do think that business structures other than MSCs are caught by the definition we would be very interested to hear the details. '

I have sent another email asking them to confirm if it will still be possible to claim expenses.

[malvolio]

There is a huge difference between MSC and umbrella, not least that you are an employee of the umbrella whereas you are supposed to own your bit of the MSC. So I wouldn't be at all surprised if Hector has not twigged that umbrellas pay their employees expenses that more conventional employees do not get, and on a more generous basis. As soon as they do, you will find that they are stopped - all in the interests of fairness, of course(or rather they will continue, but you will be paying BIKs on them)


Then again, pointing out to Gordon's little chums that they have missed this minor point is perhaps not the best idea in the world...

[Denny]

There is a huge difference between MSC and umbrella, not least that you are an employee of the umbrella:

Is there? All brollies, reputable and PAYE based or not, still deduct employers NI from our fees as well as the employees NI. If we are merely employees then we shouldn't be paying the former at all. To me reputable brollies, like Parasol etc. are merely partnering with the government to fleece us out of another 12.5% of our income illegitimately whilst not giving us any benefits in return. Now that the dispensation situation has tightenened up the situation is now worse than before.

To me the equation is simple: if we are employees and pay full whack on all our income we don't pay employers NI and either go self employed as sole traders and manage our own tax affairs via self assessment or else we pay an admin charge to Parasol's and the like to do the paperwork for us to deduct employees PAYE and NI only at source. At the moment this isn't possible and the brollies aren't set up this way (except the one I used a few years ago when I was paid gross minus the brollie admin handling charge which the agencies knew nothing about

Alternatively, we employ ourselves and but take charge of our own accounting or else we hire accountants to do this for us (SJD etc.) then we are owner managed shareholders that employ ourselves too and should pay employers NI as Shareholder/Directors and PAYE and NI as employees out of our salary whilst allowing ourselves to run our businesses as tax efficiently as we can (outside IR35 and divis).

The worst of both worlds scenario is a complete non-starter for me, and always has been, brollie dispensations or not.

Simple.

[VectraMan]

Is there? All brollies, reputable and PAYE based or not, still deduct employers NI from our fees as well as the employees NI. If we are merely employees then we shouldn't be paying the former at all.

The difference is Parasol and the like are passing on all the income we make as contractors to us (minus tax and a small fee). If you're suggesting they pay the employers NI out of their own pockets, then they obviously wouldn't last very long only charging £20 per week. If you're a genuine employee of a consultancy, then you expect the company to pay employers NI but then you also expect that the company is making far more out of you than they're paying you.