Reply to: Umbrella Company Help Please!!!

[Accountax Consulting]

I personally have advised on Umbrella company structures prior to and post Managed service companies legislation.

The key to ensuring an umbrella company is fully compliant and suitable for your specific needs is to obtain specific information.

If a company, on their website etc, is marketing itself as a tax avoidance scheme it is likely to be picked up by HMRC and therefore likely not a good option for contractors long term.

Ask for sepcific information, a breakdown of how pay is calculated, a sample payslip, a sample contract of employment, details of the expenses policy, copy of the upper contract it has with its agency/client - and get them checked out!

As an aside, a word of warning regarding dispensations - many umbrella companies publicise the fact they have dispensations as giving individuals a blanket to claim untrue expesnes - it must be remembered that expenses claimed, if incorrect, are a personal liability to the individual. Dispensations merely dispense with the need for the umbrella company to produce P11Ds come year end - do not be duped by over-publicised dispensations on umbrella websites.

Many umbrella companies do operate legitimately and unfortunately they are being priced out of the market by those umbrellas who flout the legislation.

At the end of the day, if an umbrella company comes under attack by HMRC and is found to be operating incorrectly it is the individuals who suffer (be they open to personal liability or merely having the inconvenience of seeking another umbrella company) - Umbrella companies need to remember they are only profittable because of you guys, so it is you who must ensure they are opretating correctly.

Many umbrellas have had their structures and operation reviewed by professional advisers who are happy to confirm to individuals whether the structure is compliant with current legislation. Extra care should be taken with those who cannot offer such assurances.

[Hevra]

From an agency side of things, Filetravel and Maxim Finance are both dreams to work with. On the (thankfully) rare occasions I c*ck up a timesheet both of these companies are able to pay direct to the contractor without any fuss and can normally do it same day without charge.

Please take this at face value, as I have no idea what they charge to you guys, this is just an opinion based on the agency-limited co. working relationship.

Giant are a pain in the backside to arrange TTs with

Hevra

[NotAllThere]

..The classic example being taking a miniscule salary and the rest as dividends which are treated differently for tax...

That is an NI avoiding tactic far more than a tax minimisation strategy.

If NI wasn't in the equation (both EENic and ERNic), there would be little difference between taking money as dividend income and money as salary.

[TykeMerc]

sod all NI

We pay the same tax as anyone else.

Indeed we do, but many of us take measures to avoid paying any more than the absolute minimum than we can legally get away with.

The classic example being taking a miniscule salary and the rest as dividends which are treated differently for tax.

Simplistic view...
There used to be an awful lot of people in IT contracting who totally extracted the urine and IR and now HMRC have reacted.

[ASB]

What have HMRC got against IT contractors anyway?

Actually nothing specific, except they see "leakage".

Within the film industry everybody was self employed, claimed loads of expenses and paid sod all in the way of tax and NI.

HMIT got fed up with this and went off on a couple of cases http://www.egos.co.uk/cases/HALL_v_Lorimer.htm and established a set of ground rules that basically assumed employment. These jolly naughty people then started forming companies, so they issued some new guidance to clamp down on that, had to have contracts with the service company which the engager had to establish were legal and binding otherwise they couldn't even pay the service company. Had to pay the worker directly through PAYE.

So, when they'd done this they moved onto the debacle called the CIS.

Then they realised they were still some naughty film people and builders who still weren't paying their share. So they cast the net a bit wider and dreamt up IR35 (they had of course figured out that IT was a large untapped market from them but IR35 is much wider than that).

So hector hasn't got anything specific against IT contractors. He's got something against everybody who is not straight PAYE.

I hope you feel equally victimised rather than unfairly victimised.

[NotAllThere]

Mostly they got cheesed off with so many of us totally taking the pi$$ by paying sod all NI and Tax on large incomes.

In effect they had a sizable number of people to attack that would provide a nice rate of return.

sod all NI

We pay the same tax as anyone else.

[TykeMerc]

Mostly they got cheesed off with so many of us totally taking the pi$$ by paying sod all NI and Tax on large incomes.

In effect they had a sizable number of people to attack that would provide a nice rate of return.

[NickFitz]

Are you sure about that? IIRC there's different rules out in the media, and AV etc.

There are some different rules for television and films.

http://www.hmrc.gov.uk/specialist/fi..._notes2003.pdf

Also there does appear to be some round sum allowances for subsistence.

I stand corrected

What have HMRC got against IT contractors anyway? Are they just cross with us because EDS keep on mucking up projects? That's not my fault...

[Money Money Money]

When you say all his expenses are covered...?

I'm sure that there is a lot you haven't thought about.

These guys do a better service than most and one of the best fee's as well.

Give them a call.

Click Here

[NotAllThere]

>So is it worth it?
Shop around. Some umbrellas charge more than others and some offer better service.

Giant aren't bad in my opinion, I used them for over 2 years. Giant give you a dedicated person and phone number to ring if you have any questions.

From April

I've used Giant for a few contracts. Their web interface is easy to navigate around and straight forward to use; it also keeps your records in one place and lets you track progress of expenses, payments, etc.

However, recently they've included lock in clauses with their contracts. I'd also say that smaller subsitence claims could be made easier to enter. I've raised both of these issues with them but to no avail.

On balance, I'm going limited in the new tax year.

[TykeMerc]

I binned Giant for screwing up basic admin repeatedly.

The last Umbrella that I used were Orangegenie, while they cocked things up very occasionally (like paying me twice in 1 tax period) they were a great deal better than Giant at least in my experience and paid very quickly.

[Lewis]

Giant aren't bad in my opinion

[ASB]

Are you sure about that? IIRC there's different rules out in the media, and AV etc.

There are some different rules for television and films.

http://www.hmrc.gov.uk/specialist/fi..._notes2003.pdf

Also there does appear to be some round sum allowances for subsistence.

[scooby]

The company who employs on RM's behalf reccomended Paramount Solutions, Their Umbrella Company, But his work mate said that there is better Umbrella companys out there...We just dont know which ones!
We never even heard of these type of companys before and we arent exacly sure how they work

ask who is the work mate is with!! i've been with 3 and am now Ltd Co, much better i feel.

(PS is RM the educational sector IT Services company?)

[NotAllThere]

...Self-employed is almost certainly not an option, ...

Are you sure about that? IIRC there's different rules out in the media, and AV etc.