Recruitment Agent Insisting on Umbrella

[Dan@OrangeGenie]

Hi All,

I'm new to contracting and have just set up a ltd. company for my contracting work.

I'm currently going for a contract but I've been told by the recruitment consultant that I must use their umbrella company.

Can they do this? Are there some contracts which you are unable to use a ltd. company?

Apologies if this is a stupid question, i'm new to this and am just finding my feet.

Many thanks in advance,

Steve.

This stance is becoming more common. HMRC introduced liability to the supply chain and as a result many agencies refuse to entertain Limited company contractors in the public sector.

You do have ultimate power and can refuse the role. I suggest:

1) Talk to them and gain an understanding of why. Your consultant may not be able to give you this answer, their job is to just place you. So seek an answer from their compliance team.
2) If you're not happy with the explanation, challenge but be prepared for them to give the role to someone else that is willing to accept, they have that power.
3) or walk away and find another contract.

HTH

[SlipTheJab]

Agency sounds like they don't know what they're talking about or they have a direct intrest in the umbrella they want to push you into, maybe worth doing a few checks on the agency

2 words... back hander

[NotAllThere]

I wonder if it's one the agencies mentioned in another thread?

@steviecuk - go to companies house web site and do a check on the agency. Find out how long they've been in business. See how many other directorships the directors have had. Do a credit check on them. Their lack of understanding of the norms of contracting is ringing alarms bells.

[Eirikur]

Many thanks for the responses,

I had already asked if the role was in or out of IR35 and got the following response:-

This is a contracted role via us as an agency, therefore outside of IR35. You would be either be paid by us (PAYE) or our contracted umbrella company.

I then said that I had ltd. company and got the response:-

We are contracted to only use one umbrella company and you would be unable to work with any others.

I was under the impression that they couldn't stipulate this but as I'm new to this I may be wrong!

Thanks again for the responses!

Agency sounds like they don't know what they're talking about or they have a direct intrest in the umbrella they want to push you into, maybe worth doing a few checks on the agency

[malvolio]

That sounds a bit weird - just because it's contracted to them does not in itself make it in or out of IR35, that depends on the nature of the role and engagement, working practices etc, surely.

Yes, agreed, total bollocks.

One option is to walk away: working with people who don't understand their own business is never a good idea. Where else are they going to screw you over?

[CatOnMat]

Many thanks for the responses,

I had already asked if the role was in or out of IR35 and got the following response:-

This is a contracted role via us as an agency, therefore outside of IR35. You would be either be paid by us (PAYE) or our contracted umbrella company.

I then said that I had ltd. company and got the response:-

We are contracted to only use one umbrella company and you would be unable to work with any others.

I was under the impression that they couldn't stipulate this but as I'm new to this I may be wrong!

Thanks again for the responses!

That sounds a bit weird - just because it's contracted to them does not in itself make it in or out of IR35, that depends on the nature of the role and engagement, working practices etc, surely.

[steviecuk]

Many thanks for the responses,

I had already asked if the role was in or out of IR35 and got the following response:-

This is a contracted role via us as an agency, therefore outside of IR35. You would be either be paid by us (PAYE) or our contracted umbrella company.

I then said that I had ltd. company and got the response:-

We are contracted to only use one umbrella company and you would be unable to work with any others.

I was under the impression that they couldn't stipulate this but as I'm new to this I may be wrong!

Thanks again for the responses!

[simondolan]

It shouldn't really matter whether the contract is inside IR35 or outside.

The agency have no power to insist that you use a certain vehicle to engage through, or that you use a certain provider (other than engaging someone who will bend to their will!)

As an independent contractor it should be you who decides whether you operate through an Umbrella or a limited company.

As suggested you should ask them whether this contract is deemed to be inside IR35 or not? Is this a public sector contract? If it is PS and deemed inside IR35 then ask to see the reasoning behind that decision including the results of HMRC's ESS tool.

Well, they do have all the power as they are the one offering the job. They shouldn't insist one way or the other, but if they are, and you want the job you have little choice.

You could of course decline the job based on their insistence - just depends I suppose on supply and demand

[Patrick@Intouch]

It shouldn't really matter whether the contract is inside IR35 or outside.

The agency have no power to insist that you use a certain vehicle to engage through, or that you use a certain provider (other than engaging someone who will bend to their will!)

As an independent contractor it should be you who decides whether you operate through an Umbrella or a limited company.

As suggested you should ask them whether this contract is deemed to be inside IR35 or not? Is this a public sector contract? If it is PS and deemed inside IR35 then ask to see the reasoning behind that decision including the results of HMRC's ESS tool.

[TheFaQQer]

Can they do this? Are there some contracts which you are unable to use a ltd. company?

Yes - any business can choose who they do business with.

[malvolio]

Hi All,

I'm new to contracting and have just set up a ltd. company for my contracting work.

I'm currently going for a contract but I've been told by the recruitment consultant that I must use their umbrella company.

Can they do this? Are there some contracts which you are unable to use a ltd. company?

Apologies if this is a stupid question, i'm new to this and am just finding my feet.

Many thanks in advance,

Steve.

Have you asked them why? Might be a good start.

However most likely this is a role the client has said is inside IR35 so will be taxed at source. The agency are the ones responsible for the payroll which they don't want to do so will insist you are through an umbrella so they don't have to bother.

Perhaps a lot more reading is necessary; much information on IR35 on both here and the IPSE website. And a lot of other stuff, come to that, most of which you won't know you don't know.

[steviecuk]

Hi All,

I'm new to contracting and have just set up a ltd. company for my contracting work.

I'm currently going for a contract but I've been told by the recruitment consultant that I must use their umbrella company.

Can they do this? Are there some contracts which you are unable to use a ltd. company?

Apologies if this is a stupid question, i'm new to this and am just finding my feet.

Many thanks in advance,

Steve.