Reply to: Maternity pay for offshore umbrella??

[tim123]

PS. I also made the assumption that the guy is a woman, but I see you didn't !

Oops.

Sorry

tim

[oraclesmith]

It looks as though you could get SMP because they pay class 1 NI for you. At least you're not ineligible because of this, according to the link ASB published. The problem may be getting them to acknowledge that they should do this.

It doesn't sound like you gain much from going with a CI umbrella though, as against an UK umbrella. Probably more profitable for them though.

[Meady]

My salary income is taxed through a UK payroll and is operated under normal UK rules with PAYE NI employees and emplyers contributions being deducted. The dividend income is declared on my UK tax return as foreign dividend and I pay tax on this.

In 6 years of contracting I have been within the IR35 rules and paid in salary only. The last 6 months have been through the CI company so yes, I am paying less tax but I've never been paid through dividends before so I'm not sure if I'm paying less tax than I would have done in the UK. Does this make me a hard nosed tax dodger??

And the last time I looked I was a woman - if not, maternity pay is the least of my worries!!

Thanks

[ASB]

Thanks for your comments. I think this confirms my belief that I'm not entitled to anything. Dont want to dig too deep with the DHSS for fear of too many questions!!

Thanks

I think you need to ask yourself 2 questions.

1) Am I UK resident for tax purposes. If so then the location of your employer makes little difference to you entitlements to SMP. [Unless the foreign body has immunity - basically it's a consulate].

http://www.dwp.gov.uk/advisers/ni17a/smp/smp_5.asp

2) Should I be UK resident for tax purposes? i.e. you should be treated as resident but you do not know it. If you are physically working in the UK for any length of time then the answer to this question is probably (but not necessarily) yes.

[oraclesmith]

Ok, I made a bit of an assumption based on "'With regard to your email, unfortunately we, being a Guernsey
registered company, are unable to assist you with maternity pay.'"

However, I bet you a fake fiver they aren't paying UK taxes. Shall we ask Meady ?

PS. I also made the assumption that the guy is a woman, but I see you didn't !

[tim123]

Well of course it does. For a start, the employee/contractor in question is not paying UK national insurance or UK income tax.

And Where did the OP say that?

I once worked through a CI brolly. The only reason that they were in CI was because that is where their staff were. But I was payrolled locally, had a local accountant, paying my taxes and NI locally. Had I been long term sick I would (I hope) have qualified for the local scheme.

You are making an assumption that the guy is working through a CI brolly in order to gain a tax advantage. He has not said this (and I have assumed that this isn't the reason)

tim

[oraclesmith]

I would agree with you if the employee had been subcontracted to the host country from another country.

But this isn't the case.

The employee lives in the UK, has always lived in the UK, is currently working at a location in the UK and has no links of any kind with the employer's home country.

I can't see that moving the holder of the employment contract to another county allows the employer to ignore UK employment rules for staff permanently based in the UK . Anybody could set up a 'lets get around employment rules' scam company like this, if it worked.

tim

Well of course it does. For a start, the employee/contractor in question is not paying UK national insurance or UK income tax. The contract itself will be governed solely by Guernsey law - which is how the umbrella can get away with offering low tax employment. The same notion which allows the company and the employee to avoid UK tax also allows the company and employee to avoid UK employment law and government benefits. As I said, there appears to be qualifying periods and other conditions for claiming under the reciprocal agreements, so this needs looking into.

The link with the employers country is that are an employee of that company and that company is solely governed by Guernsey law.

Meady - don't give up just yet. It's worth googling on maternity, Guernsey etc in order to get some solid info on this. You may well be able to claim SMP under the reciprocal agreements, but this is way below the normal maternity pay you'd get from a decent UK firm.

[Mordac]

Can anyone tell me if I am entitled to maternity pay from the government if I'm registered with an umbrella company in Guernsey (working in the UK)? The umbrealla company has said they cant help me with it.

If you've signed up with a Guernsey company to minimize tax (or avoid it altogether?) then you've got a bit of a cheek wailing about maternity pay. My guess is you're entitled to SMP in the UK (assuming you are normally a UK taxpayer) but if the DHSS (or whoever) think you're on a dodge and tell you to get stuffed, you won't find much sympathy round here.

Edit - I've just realised you weren't wailing at all, so acknowledged.

[Meady]

Thanks for your comments. I think this confirms my belief that I'm not entitled to anything. Dont want to dig too deep with the DHSS for fear of too many questions!!

Thanks

[MarillionFan]

You don't have a weekly article on the BBC do you?

[tim123]

I would agree with you if the employee had been subcontracted to the host country from another country.

But this isn't the case.

The employee lives in the UK, has always lived in the UK, is currently working at a location in the UK and has no links of any kind with the employer's home country.

I can't see that moving the holder of the employment contract to another county allows the employer to ignore UK employment rules for staff permanently based in the UK . Anybody could set up a 'lets get around employment rules' scam company like this, if it worked.

tim

[oraclesmith]

Is you're an employee of a global firm, then your employment contract will be with a UK registered branch of that firm. EDS Limited, for example. If you then got sent to India for 6 months you aren't suddenly able to claim Indian government sickeness benefits (not that there are any!).

If you actually have an employment contract with a company registered outside the UK then that company will be governed by the laws of the state they are registered in. And so will your contract. There are some reciprocal arrangements re. national insurance and certain benefits between the channel islands and the UK, but they depend on length of contributions amongst other things. The tax avoiders that get a channel islands umbrella have only got themselves to blame if they can't get UK taxpayers to bale them out when things go wrong.

The umbrella's abroad simply don't have to pay anything unless their government insists on it. The umbrella's in the UK probably have to pay SMP but nothing else. They all probably have insurance to cover this eventuality. UK umbrella's like other employers can reclaim the SMP from the government. In my opinion.

[tim123]

1) Do you guys (and grls) really think that the location of the company is the factor that decides whether a person is entitled to pa/maternity pay? Can EDS say to their UK based employees "we are a US company so it's nothing to do with us?", No,they can't. It's the (permanent) location of the worker that critical to employment rights, not the location of the employer.

2) But, who pays it? This is a big problem and it's one that could just bring down the 'managed' sector should someone try and claim their 'due'.

It is, IMHO, undeniable that people working through (UK based) Managed Service companies are entitled to claim such payments. So, where does the money come from? It can't come from the Managed Service company's income, because it doesn't really have enough, all it has is the contractor's billings from which it needs to hold back some funds for this possibility (in the same way as it ought to hold back funds for holiday pay).

But if it does this, some people are going to say, I don't have a partner so I'm never going to claim or I'm male and I get less back than a female does so I should have less deducted. Can the Managed Service company hold back different amounts depending upon each individual's personal circumstances? No it can't, as that would fall foul of Sex/Age/Marital Status Discrimination Laws.

So what should a Managed Service company do to solve this problem? I really have no idea, except to suggest that when asked, the MSC say "sorry due to some <suprious reason>, that's nothing to do with us" and hope that the punter goes away.

tim

[oraclesmith]

If she's umbrella'd then she's an employee of the umbrella, unless she's on a managed limited basis. A lot depends on where she's paid her national insurance contributions and how long she's been employed by a Guernsey firm before requiring maternity pay. There is no SMP payable in Guernsey, as far as I know, as it's a UK idea, but there may be a maternity allowance. There is no maternity allowance or grant in the UK anymore. There are some reciprocal arrangements in place, but entitlement may take some working out !

[Cowboy Bob]

Who's going to pay it? You are a contractor not an employee, and as far as I know it's employers that are normally the conduit for things like this. You should be entitled to your statutory pay from somewhere, but I'm not sure if you can claim it direct from the DHSS. If not, I guess you're sh!t out of luck.