umbrella company woes!!

**foritisme** · 9 February 2006, 11:18

Your friend - was he with the 360 group ?

I have been using Parasol, have been very good up to now. They have a dispensation for expenses (i.e upto £45 per night for b&b costs without a receipt), but it is still your responsiblity when claiming. Parasol have just implemented the receipts for fuel costs so they can claim back the VAT on your behalf - not that you will see any of it. The amount of receipts they want does not take into account that the allowance is also for fair wear and tear. So I have taken the decision to go back ltd and look after my own affairs.

**DaveB** · 9 February 2006, 11:26

Originally posted by skydiveruk

1. Is there any benefit in my approaching the IR to admit all this, or should I just wait and see if they approach me? Anyone been in this situation?

2. Will my cover with the PCG cover an investigation even if I'm working for an umbrella company?

2. Can someone recommend a decent/honest management company?

1. Probably not. The odds are in your favour anyway in terms of likelyhood of an investigation. Not as good as if you were ltd though. HMRC seems to have a bee in it's bonnet about Umbrellas atm.

2. AFAIK yes it should, as the cover is personal to you and not the company. Dont confuse your resposibilties for paying your tax correctly with those of your company or umbrella.

3. You, running your own ltd + a good accountant. It's not that hard, really.

**ASB** · 9 February 2006, 11:52

Originally posted by skydiveruk

Morning all! I'm currently working under hyperlink's managed services (umbrella company), been with them for a year. Previous to this I was using their accounting services (360 group) and I was fully caught under ir35. I had some issues with VAT and they suggested using their managed service to remove the hassle, this sounded like a good option and they calculated my weekly take-home based on my circumstances. I was amazed!! it would mean around £200 a week extra in my pocket, they backed it up a letter from the Inland Revenue which suggested it was all legitimate. I questioned the system and they assured me that it was all above board...so i signed up!!

Anyway, a colleague of mine was recently hit by the Inland Revenue for a very large bill/fine related to expenses claims. This prompted me to re-investigate my situation, it seems that I have been very naive, if what I have read is correct then I could be in for a large bill/fine (at least 10k)

. So my questions are:

1. Is there any benefit in my approaching the IR to admit all this, or should I just wait and see if they approach me? Anyone been in this situation?

2. Will my cover with the PCG cover an investigation even if I'm working for an umbrella company?

2. Can someone recommend a decent/honest management company?

Thanks

1. If you have actually incurred the expenses you have claimed you are fine. I assume you haven't. If the IR find you then they will go for penalities up to 100% as well. If you cough your case will be better. Only you can decide how high the risk is - it could actually be very high indeed. If your mate is at either the same umbrella or same accountants you can expect a visit sooner rather than later.

2. Have you tried asking THEM. You can ring abbey who are the advisors and actually get a definitive answer. They'll also give you sensible advice on 1.

**boredsenseless** · 9 February 2006, 12:15

Originally posted by ASB

1. If you have actually incurred the expenses you have claimed you are fine. I assume you haven't. If the IR find you then they will go for penalities up to 100% as well. If you cough your case will be better. Only you can decide how high the risk is - it could actually be very high indeed. If your mate is at either the same umbrella or same accountants you can expect a visit sooner rather than later.

2. Have you tried asking THEM. You can ring abbey who are the advisors and actually get a definitive answer. They'll also give you sensible advice on 1.

Actually as its still within the last year you can come clean and just alter the paperwork. They'll charge interest on the amount of extra tax now owed.

If its for work over 12 months since the tax year ended it gets a bit more involved.

Talk to a professional tax adviser, and if its within the time limit for changing your self assessment returns do it, otherwise only you can decide how to play it as after this time period fines will definetly apply and at the moment they are large!

**Bradley** · 9 February 2006, 15:47

Originally posted by boredsenseless

Actually as its still within the last year you can come clean and just alter the paperwork. They'll charge interest on the amount of extra tax now owed.

If its for work over 12 months since the tax year ended it gets a bit more involved.

Talk to a professional tax adviser, and if its within the time limit for changing your self assessment returns do it, otherwise only you can decide how to play it as after this time period fines will definetly apply and at the moment they are large!

I would think that the umbrella company would also charge you for the extra national insurance charges it has incurred because your expense claims were false. They would no doubt add on interest and an "admin" charge (think of your gran's age and multiply it by the Queen's age to get some idea).

BTW voluntarily coughing to the Revenue saves you a guaranteed 20% in penalty terms.

**partimer** · 10 February 2006, 10:12

small print

Once again I'm amazed that people don't understand the small print of the Brollies.
Even worse there are people who don't understand the concept of expenses. In a vast majority of cases, expenses are financially neutral. You have to spend the money to get it re-paid. Then the expense has to be incurred as part of your business.

Common sense should tell you that if you claim you travel 400 miles a day but actually sit at home, then you're committing fraud. If you try claiming a plama screen as a business expense but do 2nd line supprt then what do you expect ?

Use common sense.

**Denny** · 10 February 2006, 12:11

Originally posted by foritisme

Your friend - was he with the 360 group ?

I have been using Parasol, have been very good up to now. They have a dispensation for expenses (i.e upto £45 per night for b&b costs without a receipt), but it is still your responsiblity when claiming. Parasol have just implemented the receipts for fuel costs so they can claim back the VAT on your behalf - not that you will see any of it. The amount of receipts they want does not take into account that the allowance is also for fair wear and tear. So I have taken the decision to go back ltd and look after my own affairs.

Very wise. As I said in a previous thread, most of these brollies, even the so called upfront bona fide ones are being scrutinised by Gordo. There's no way you could claim £45 per night for bb costs unless you'd actually incurred those expenses during the course of your contract strictly for business purposes and with supporting receipts to prove it.

Personally, I would give Parasol a wide berth. They're too big, too bureaucratic. They may be safe and unlikely to go under taking your money with them but they're also in the pockets of agencies too, what with their affiliations with the PGC and ATSCO, which doesn't bode well for impartiality in the event of candidate payment problems. Would you risk losing referrals and potential business just to challenge an agency to support a candidate 'client' who'd run into payment difficulties due to non-paying agency?

If I go through a brolly I would have to be opted in, otherwise IR35 compliant with supporting working conditions and it would have to be impatial enough to satisfy my criteria that they viewed me as their client, not the agency. Otherwise what's the point in using them when they charge you not the agency admin fees to process payments and you are still stung with employers NI contributions as well as employees NI.

**foritisme** · 10 February 2006, 12:22

If you are using a brollie company it doesn't matter whether you opt in or out with respect to IR35. You get taxed on all your income (less valid buinsess expenses & fees).

**freshblue** · 10 February 2006, 12:23

Originally posted by Denny

Very wise. As I said in a previous thread, most of these brollies, even the so called upfront bona fide ones are being scrutinised by Gordo. There's no way you could claim £45 per night for bb costs unless you'd actually incurred those expenses during the course of your contract strictly for business purposes and with supporting receipts to prove it.

Personally, I would give Parasol a wide berth. They're too big, too bureaucratic. They may be safe and unlikely to go under taking your money with them but they're also in the pockets of agencies too, what with their affiliations with the PGC and ATSCO, which doesn't bode well for impartiality in the event of candidate payment problems. Would you risk losing referrals and potential business just to challenge an agency to support a candidate 'client' who'd run into payment difficulties due to non-paying agency?

If I go through a brolly I would have to be opted in, otherwise IR35 compliant with supporting working conditions and it would have to be impatial enough to satisfy my criteria that they viewed me as their client, not the agency. Otherwise what's the point in using them when they charge you not the agency admin fees to process payments and you are still stung with employers NI contributions as well as employees NI.

But if Parasol are too bureaucratic as a result of properly checking expense claims then which way do you want it? I have used them and also felt I could just concentrate on the job for the client and not worry about tax issues. Not for everyone by any stretch but works for many.

For managed services read composite = hassle and risk. PAYE Brolly or Ltd co is the future....

umbrella company woes!!