Employee or Umbrella?

[Keanu2020]

Hello. I have a few engagements with a client and they are asking my company to take on more work. I have a person I know well lined up. I’m trying to work out if better to employee them direct through my company, or put them through an umbrella (which they are happy with as many pushing everything to pension). My question is mainly related to IR35, does either route (employee or through umbrella) strengthen or weaken my defence should IR35 ever come up? All roles have SDS clearly saying outside form client, also, it’s a direct relationship, no agents in chain. Thanks.

[northernladuk]

You most certainly do not want to employ them. You are on the hook for all the legalities and won't be able to get rid of them when the assignment ends. They'll also (after a period) be able to take you to tribunal if you do get rid when the work dries up.

Don't mess about trying to do business with IR35 pulling the strings. Do the right thing for the situation and forget IR35 for now. Doing good business is the best defense for IR35, not pretending to do the right thing.

Is the work they will be doing truly outside? Why not engage them as a contractor and they just invoice you? Work out what the situation is with the client and work from there. Also speak to your accountant. They shouldn't be giving advice on how to run your business (due to MSC) but they should be able to give advice on the tax/finance side which would include best way to engage them for most efficiency and not messing up your books.

[Protagoras]

I have a few engagements with a client and they are asking my company to take on more work.

All roles have SDS clearly saying outside form client, also, it’s a direct relationship, no agents in chain.

Are you saying that the client has defined a new role and has already provided a SDS for that role?

The word 'role' makes me wonder if the client expects supply of a bod (echo NLAD's question 'Is the work they will be doing truly outside?').

+1 for NLAD's list of disadvantages of taking on an employee. If the additional work can be defined in terms of clear deliverables, then subcontracting this may be possible, which also offers risk assignment rather than YourCo holding all the risk. But need to be wary of trying to morph a role to deliverables.

I'd ask your accountant / professional advisors to identify the pros and cons of the options to aid decision making and so that you have a documented basis for making that decision.

[Keanu2020]

Thanks to both for comments. The role is outside, I’m doing it today with an SDS in place. The new person is back filling really for work my company is already committed to deliver (a number of deliverables). Client wants to contract more help on something else my company bid for originally and won in a competition, so need help / capacity to do all. Yeah, avoiding the whole HR thing is very compelling, have spoken with accountant, but was just financial advice and offer to introduce to HR company they work with. Forgetting about IR35 is good advice.

The potential employee closed their company down few years back as all roles were inside. Been working through umbrellas since then (not an uncommon story I suspect). As pushing most to pension, happy to keep doing that. Initial deliverables are for 5 to 6 months, but could run longer.

[northernladuk]

Thanks to both for comments. The role is outside, I’m doing it today with an SDS in place. The new person is back filling really for work my company is already committed to deliver (a number of deliverables). Client wants to contract more help on something else my company bid for originally and won in a competition, so need help / capacity to do all. Yeah, avoiding the whole HR thing is very compelling, have spoken with accountant, but was just financial advice and offer to introduce to HR company they work with. Forgetting about IR35 is good advice.

So forget the accountant introduction. I'd not be taking that up just for MSC let alone wanting to be more in control. I assume your client is OK with this setup and doesn't need any changes in contracts. If not then happy days.

The potential employee closed their company down few years back as all roles were inside. Been working through umbrellas since then (not an uncommon story I suspect). As pushing most to pension, happy to keep doing that. Initial deliverables are for 5 to 6 months, but could run longer.

So just go brolly then. Nice and simple. Have a chat to Lucy at Clarity to see if there are any final pitfalls and if not then get on with it.

[Keanu2020]

So forget the accountant introduction. I'd not be taking that up just for MSC let alone wanting to be more in control. I assume your client is OK with this setup and doesn't need any changes in contracts. If not then happy days.

So just go brolly then. Nice and simple. Have a chat to Lucy at Clarity to see if there are any final pitfalls and if not then get on with it.

thanks. Useful to kick thinking around and feels like a plan.

[eek]

So forget the accountant introduction. I'd not be taking that up just for MSC let alone wanting to be more in control. I assume your client is OK with this setup and doesn't need any changes in contracts. If not then happy days.

So just go brolly then. Nice and simple. Have a chat to Lucy at Clarity to see if there are any final pitfalls and if not then get on with it.

Technically, it's not brolly work if the agency / consultancy are the one paying the umbrella's fee (which I hope you would be). Then it's Professional Employment Organization (PEO) but beyond that very minor point - just offload the employment hassle to other people (Clarity / Lucy) - it simply isn't worth it.

The fact large sums of money arrive and instantly go elsewhere means that the MSC legislation isn't anything to worry about....

[northernladuk]

The fact large sums of money arrive and instantly go elsewhere means that the MSC legislation isn't anything to worry about....

I was referring to MSC as a nod to his accountant being involved in his business with the HR offering they suggested. Just like you should never use a same company brolly/accountant flip flop I'd be wary of working with the HR company the accountant is involved with. Maybe overkill but still, thought I'd mention it.

[eek]

I was referring to MSC as a nod to his accountant being involved in his business with the HR offering they suggested. Just like you should never use a same company brolly/accountant flip flop I'd be wary of working with the HR company the accountant is involved with. Maybe overkill but still, thought I'd mention it.

Oh you want a professional if you are outsourcing the employment of people - which again is why there are very few umbrellas I would trust with such a task.

Clarity is one of the first that comes to mind. I could probably give a few other names but it's an area where I would be careful you could save yourself a few quid and destroy your reputation at the same time...

[northernladuk]

Oh you want a professional if you are outsourcing the employment of people - which again is why there are very few umbrellas I would trust with such a task.

Clarity is one of the first that comes to mind. I could probably give a few other names but it's an area where I would be careful you could save yourself a few quid and destroy your reputation at the same time...

Absolutely.