Best Umbrella Company to use?

[PayMatters]

At least get your facts right about VAT & Expenses as well.....

In what respect???

[PayMatters]

Dredging up old posts is not considered good manners. At least wait for a contractor to ask a question that you can help with now.

Apologies. I came across the discussion from searching google and didn't look at the date of the last post.

[blacjac]

In what respect???

This difference enables Umbrella Companies to offer reimbursement of expenses.

So no one but umbrella companies can reimburse expenses then?

Next you'll be telling us that your special dispensation means you can claim expenses without reciepts.....

[PayMatters]

So no one but umbrella companies can reimburse expenses then?

Next you'll be telling us that your special dispensation means you can claim expenses without reciepts.....

I didn't say only Umbrella Companies can reimburse expenses I was explaining why an Umbrella can (and hence why an Umbrella is different to say being paid through your agency).

If our invoices were worded "Fees for Joe Blogs COntractor" then we could not do this. They have to refer to the service we have provided rather than the person i.e. Fees for IT Consultancy. I just thought that some people may not know this and it may be of interest!

re dispensations. We don't rely on dispensations although HMRC have introduced new scale rates meaning that receipts aren't required for certain subsistence claims (and obviuosly mileage claims). See http://www.hmrc.gov.uk/briefs/income-tax/brief2409.htm

[Beefy198]

Of course they're required. That document itself says you need proof that it was incurred. Maybe you don't need to keep it on file but one day the HMRC may ask to check you are administering the system correctly and ask for proof.

Maybe it's a good idea to ask your contractors to keep receipts on file for themselves, hm?

Secondly, what routine checks do you do to ensure that you are running the system correctly and it's not being abused?

Finally, when do you make subsistence payments? I bet (though I'm sure you'll deny) that a lot of your contractors claim breakfast, lunch and dinner every day despite the fact that their day isn't substantially different to their previous day (and the day before that, and the day before that...)

For example... "If the employee regularly leaves home before 6.00 am because, for example, he works an early shift he would not be entitled to use the breakfast benchmark scale rate." I bet despite this loads of your claim food everyday regardless.

[PayMatters]

Of course they're required. That document itself says you need proof that it was incurred. Maybe you don't need to keep it on file but one day the HMRC may ask to check you are administering the system correctly and ask for proof.

Maybe it's a good idea to ask your contractors to keep receipts on file for themselves, hm?

Secondly, what routine checks do you do to ensure that you are running the system correctly and it's not being abused?

Finally, when do you make subsistence payments? I bet (though I'm sure you'll deny) that a lot of your contractors claim breakfast, lunch and dinner every day despite the fact that their day isn't substantially different to their previous day (and the day before that, and the day before that...)

For example... "If the employee regularly leaves home before 6.00 am because, for example, he works an early shift he would not be entitled to use the breakfast benchmark scale rate." I bet despite this loads of your claim food everyday regardless.

No we don't encourage people to claim the full allowance (and actually like the fact that many claim less or none at all). For those that do claim most fall within the one meal bracket i.e. no breakfast or dinner so it's just £5 per day to cover lunch.

We don't require receipts but advise our employee to retain their copies.

HMRC Scale Rates are a lot less than those offered by many other Umbrella Companies so while it may be seen as a relaxing as the rules it isn;t for people that just follow the HMRC Guidelines?

[Beefy198]

You don't think the HMRC is vague with their advice?

I also disagree that that puts the onus on the employers and not the employee. If they decided you owed them lots of tax for abuse of this system and you folded who do you think they would chase next?

[Beefy198]

You also failed to answer what checks and balances you have.

And if I drive to the same site in say Birmingham for the whole of my contract would you allow me to claim food costs?

Finally, I wonder what 'advice' I would get about expenses if I was to call your company now and pretend to be a potential customer.

[Bazdaa]

Hi,

First Time Poster here!

I have been reading and reading and reading this thread and others, and have to admit that I am still confused as to which route to go down, Umbrella or ltd company.

I think that I am going down the ltd route as have no confidence in Umbrella companies, as I have noticed that while they make all these wonderful promises about how much money they can save you. Its your ar*e on the line if the Taxman comes knocking. I have also noticed that these umbrella companies have SALES people that will say anything to get you through the door, but you tend to see the cracks when you start querying them.

What I would like to know is, is it possible for a ltd company (with a contract) that falls within IR35 to claim the same dispensations etc as these umbrella companies, or is it just the flat 5% that is allowed?

Bazdaa

[Nixon Williams]

What I would like to know is, is it possible for a ltd company (with a contract) that falls within IR35 to claim the same dispensations etc as these umbrella companies, or is it just the flat 5% that is allowed?

Bazdaa

Your own limited company can certainly apply for a dispensation, although some HMRC offices are reluctant to grant them to one person companies. All a dispensation does is reduce the reporting of expenses to HMRC on the P11d form (p11d is the form that lists expenses for the tax year).

Even if you are caught by IR35 you can still claim the same expenses that you can claim through an umbrella, the added benefits of your own company are:

1. Benefit from the 5% allowance
2. Typically lower fees than an umbrella - don't be fooled by claims of lower fees after tax relief - this relief is available to you with your own company!
3. Benefits from the Flat Rate VAT scheme.
4. Usually a wider range of expenses that can be claimed.
5. Future contracts may not be caught by IR35!

I hope this helps.

Alan