Reply to: Preferred Umbrellas

[Dryv]

Guys,

Thanks for your help...

[TheFaQQer]

Well, I never! You live and learn.

CUK has one or two of them, allegedly.

[C0ldf1re]

From Wikipedia -...(etc)...

Well, I never! You live and learn.

[Waldorf]

Excuse the interruption by the ignorant, but (if it is relevant to this thread) what is a sockie?

From Wikipedia -

A sockpuppet is an online identity used for purposes of deception within an online community. In its earliest usage, a sockpuppet was a false identity through which a member of an Internet community speaks with or about himself or herself, pretending to be a different person,[1] like a ventriloquist manipulating a hand puppet.

[C0ldf1re]

I do not have a sockie as I am sure you know, I would be quite happy for our admin friends to do what ever checks they can... Alan

Excuse the interruption by the ignorant, but (if it is relevant to this thread) what is a sockie?

[Nixon Williams]

Some suggestions would be :

1. Charging a higher fee if the processing is monthly rather than weekly - the cost to the umbrella should be no higher, just because the values are greater.

So instead of say, £30 per week or £120 per month - how about a fixed cost of £30 for each time an invoice is processed? Our monthly fee is actually less than the weekly fee - Your fees are £85 per month or £26.50 per week - my point was why not charge £26.50 for each process, so if a client uses you once a month, their fee would be £26.50!

2. Claiming VAT back on mileage and not passing this saving on to the contractor. VAT has no bearing on the employee's earnings No, but it ends up in the umbrella's bank account not the client's.

3. Another link in the chain and so a greater risk of loss through an umbrella defaulting. We have seen several of these in the past few years and I am sure there will be more in the future. Umbrella companies have gone bust in the past because the owners have spent money that was not theirs to spend i.e. it was owed to HMR&C; anyone looking to use an umbrella company should make sure that the company is well established, is financially sound and has a good reputation within the industry. You are also probably aware that a number of agencies have gone to the wall so there is no greater risk working through an umbrella than there is when working with any other third party.
My point was that an umbrella is another link in the chain, so more risk.

These are just a few from the top of my head.

Benefits of your own limited company vs. an umbrella:

1. Benefit from the VAT Flat Rate Scheme - typical saving £1500 per annum, more in the first year;

2. Lower fees - typical saving £500 per annum. I would definitely disagree with this one - our fees are £85 per month But some are not, this posting was directed at umbrella's generally.

3. Claim the same expenses, sometimes more. If the claim would be the same there is no perceived advantage Agreed, but my point was that sometimes greater expenses can be claimed.

4. No risk of an umbrella failing. See above re agencies

5. Greater tax savings due to being able to use dividends. Only if the contract is outside IR35 Not true, the savings from Flat Rate VAT, 5% allowance would give a better net income, although I agree it would not be huge.

I didn't know you had a sockie Alan

I do not have a sockie as I am sure you know, I would be quite happy for our admin friends to do what ever checks they can.

Alan

[TheFaQQer]

That was the agency going belly up wasn't it Faqqer??

Nope:

No the umbrella company. But the agency wont accept the ceased trading date as the contract termination date and insist on paying the now deceased umbrella company for services provided by the contractor after the ceased trading date.

The umbrella company is not in administration nor liquidation but has disappeared.

Interesting one, that

[LisaContractorUmbrella]

http://forums.contractoruk.com/accou...tract-end.html

That was the agency going belly up wasn't it Faqqer??

[TheFaQQer]

Could you name some?

http://forums.contractoruk.com/accou...tract-end.html

[LisaContractorUmbrella]

Some suggestions would be :

1. Charging a higher fee if the processing is monthly rather than weekly - the cost to the umbrella should be no higher, just because the values are greater.

So instead of say, £30 per week or £120 per month - how about a fixed cost of £30 for each time an invoice is processed? Our monthly fee is actually less than the weekly fee

2. Claiming VAT back on mileage and not passing this saving on to the contractor. VAT has no bearing on the employee's earnings

3. Another link in the chain and so a greater risk of loss through an umbrella defaulting. We have seen several of these in the past few years and I am sure there will be more in the future. Umbrella companies have gone bust in the past because the owners have spent money that was not theirs to spend i.e. it was owed to HMR&C; anyone looking to use an umbrella company should make sure that the company is well established, is financially sound and has a good reputation within the industry. You are also probably aware that a number of agencies have gone to the wall so there is no greater risk working through an umbrella than there is when working with any other third party.

These are just a few from the top of my head.

Benefits of your own limited company vs. an umbrella:

1. Benefit from the VAT Flat Rate Scheme - typical saving £1500 per annum, more in the first year;

2. Lower fees - typical saving £500 per annum. I would definitely disagree with this one - our fees are £85 per month

3. Claim the same expenses, sometimes more. If the claim would be the same there is no perceived advantage

4. No risk of an umbrella failing. See above re agencies

5. Greater tax savings due to being able to use dividends. Only if the contract is outside IR35

Alan

I didn't know you had a sockie Alan

[Steven@Parasol]

why would the recruiter have to pay twice? surely the onus would be on the contractor that chose the umbrella company that decided to disappear?

Not in all circumstances. Some of the recent high profile umbrella company failiures have led to agencies having to pay twice. Hence a full and transparent independent audit of the umbrella company's books can be part of the process of getting on an agency PSL.

[Nixon Williams]

C0ldf1re
"Umbrella" services do things for their own benefit, not yours! There are a host of potential pitfalls down the line. Setting up your own Ltd company is a nuisance, but much safer in the long run.

Could you name some?

Some suggestions would be :

1. Charging a higher fee if the processing is monthly rather than weekly - the cost to the umbrella should be no higher, just because the values are greater.

So instead of say, £30 per week or £120 per month - how about a fixed cost of £30 for each time an invoice is processed?

2. Claiming VAT back on mileage and not passing this saving on to the contractor.

3. Another link in the chain and so a greater risk of loss through an umbrella defaulting. We have seen several of these in the past few years and I am sure there will be more in the future.

These are just a few from the top of my head.

Benefits of your own limited company vs. an umbrella:

1. Benefit from the VAT Flat Rate Scheme - typical saving £1500 per annum, more in the first year;

2. Lower fees - typical saving £500 per annum.

3. Claim the same expenses, sometimes more.

4. No risk of an umbrella failing.

5. Greater tax savings due to being able to use dividends.

Alan

[administrator]

Thanks TheFaQQer - you should now have PM access Dryv.

[LisaContractorUmbrella]

"Umbrella" services do things for their own benefit, not yours! There are a host of potential pitfalls down the line. Setting up your own Ltd company is a nuisance, but much safer in the long run.

Could you name some?

[Dryv]

For example, if your umbrella company goes under, as far as the end client is concerned, they have paid the recruiter and that's that. The recruiter then transfers these funds to the umbrella to pay the contractor. If that umbrella disappears, the contractor hasn't been paid and the recruiter can be liable to pay twice.

why would the recruiter have to pay twice? surely the onus would be on the contractor that chose the umbrella company that decided to disappear?