Sorry chaps but not sure you can help with this. I suppose an umbrella company provides some certificate to the agency / end client that they are paying the end contractor through payroll? I ask because I could run a payroll in my company and pay myself fully through PAYE? Not sure why we should pay 6% fees? Any thoughts?
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Unless you're earning 20k or being massively ripped off, it isn't going to be 6%.
Practically speaking, the liability falls on the supply chain if IR35 isn't operated properly and, while it's theoretically possible that the Fee Payer could operate payroll and pay the deemed payment to YourCo, it's unlikely that they would do this (because they and the client then need to care about IR35 and all the faff that goes with it). Ultimately, it's a no-brainer to ban PSCs and require that you use an umbrella.
So, practically speaking, it's a non-starter, even if theoretically possible.
Note that the Fee Payer is required by law to operate a deemed payment in the event of an inside determination, so they can't just pay YourCo gross.
Also note that the legislation was clarified late in the day to ensure that umbrella companies do not need to be paid net of tax (in case that is the reason for your question, i.e., why an umbrella company and not MyCo? - not all intermediaries are equal in that sense). In any case, most clients will opt to ban PSCs and mandate umbrellas and thereby take IR35 out of the equation.
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I think the argument goes that because a single person company cannot be trusted to pay the appropriate tax someone else should do it for them.
the issue is that there is zero reason for a contractor to trust an umbrella company as their membership associations see workers as a profit Centre / product rather than their customermerely at clientco for the entertainmentComment
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Thanks a lot chaps. Some good inputs here.Comment
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