Reply to: Ir35 take home 85% under umbrella.

[lucyclarityumbrella]

We can but hope that it puts pay to referrals and helps to push the business in the right direction to compliant brollies!

[cojak]

Oh happy days!

[lucyclarityumbrella]

As of the 30th September 2017, recruitment agencies will need to be 100% confident with the companies they recommend to contractors, as new laws come into force. In an unusual turn the government has suggested that any consultants receiving kick backs for referrals, even not in monetary form, could find themselves caught up and potentially prosecuted for criminal tax evasion if they recommend a tax avoidance scheme.

Take a look at this for more details...

[ASG]

True but there are some new rules coming out in September that will mean the recruitment agencies will need to be more careful over the umbrella companies they have 3rd party hire agreements with. Which is great news for the Umbrella companies that play by the rules.

What new rules in September?
Am I missing something?

[lucyclarityumbrella]

True but there are some new rules coming out in September that will mean the recruitment agencies will need to be more careful over the umbrella companies they have 3rd party hire agreements with. Which is great news for the Umbrella companies that play by the rules.

Unless I am being completely blonde, can you explain what new rules these are? There has been debt transfer in place for some time already

[lucyclarityumbrella]

One very worrying trend though is the abuse of the term "umbrella company". Reputable companies must be sick to death of tax scams calling themselves umbrella companies. How this is tackled, I don't really know.

It is frustrating - trying to explain specifically to newbies why they are not true umbrella's is tedious to say the least.

[piebaps]

So, it is not really HMRC's role to act as a policeman in the commercial tax adviser market place. All their spot light announcements are aimed at potential and actual customers of tax advice schemes. There is no way HMRC are going to target scarce resources engaging in a "whack a mole game" where they are guaranteed to always be behind the curve. The emphasis (rightly in my view) is on targeting individuals to make sure they meet their legal obligations (and no more). Obviously, public education is a big part of this and here, CUK serves an invaluable purpose since its search engine results seem amazingly good for topics like this. The community here helps massively too. If education is important, maybe HMRC should make a point of much more high profile campaigns in the media instead of low profile search light bulletins on their website. One very worrying trend though is the abuse of the term "umbrella company". Reputable companies must be sick to death of tax scams calling themselves umbrella companies. How this is tackled, I don't really know.

When there was a run on pension liberation fraud it was taken seriously Pension scams | Action Fraud

These scheme promoters are IMHO doing pretty much the same thing. The fraudsters were taking their cut and leaving the unwitting pension members with tax bills in just the same way as the scheme operators are here.

[lucyclarityumbrella]

Take home via a true umbrella is more likely to be in the region of 52-56% for most locums. Anything more and I would, as everyone else has said, run a mile!

[BrilloPad]

Maybe so, but at the end of the day you are personally responsible for paying the correct taxes. Being advised how much is due is fair enough, and so is leaving it to someone else to do the donkey work.

But when the result is a net income much over 75% of your gross after fees paid to your advisor, then alarm bells should be ringing.

That's why HMRC aren't involved. It's not their problem, it's up to you to get proper, accurate advice.

I agree with all f that. However I suspect our definition of correct might be different.

Having been stung personally I would like to try to warn as many others as possible.

[malvolio]

True but there are some new rules coming out in September that will mean the recruitment agencies will need to be more careful over the umbrella companies they have 3rd party hire agreements with. Which is great news for the Umbrella companies that play by the rules.

Maybe so, but at the end of the day you are personally responsible for paying the correct taxes. Being advised how much is due is fair enough, and so is leaving it to someone else to do the donkey work.

But when the result is a net income much over 75% of your gross after fees paid to your advisor, then alarm bells should be ringing.

That's why HMRC aren't involved. It's not their problem, it's up to you to get proper, accurate advice.

[SenigPAY]

Why would they? It's up to you to pay the correct taxes...

True but there are some new rules coming out in September that will mean the recruitment agencies will need to be more careful over the umbrella companies they have 3rd party hire agreements with. Which is great news for the Umbrella companies that play by the rules.

[Fred Bloggs]

Needs to get more media attention before there is even a chance of HMRC going after the pushers.

I honestly cannot see this ever happening. Each UK individual self assesses and is responsible for paying the correct tax on their worldwide income (with certain exceptions, obv). So, it is not really HMRC's role to act as a policeman in the commercial tax adviser market place. All their spot light announcements are aimed at potential and actual customers of tax advice schemes. There is no way HMRC are going to target scarce resources engaging in a "whack a mole game" where they are guaranteed to always be behind the curve. The emphasis (rightly in my view) is on targeting individuals to make sure they meet their legal obligations (and no more). Obviously, public education is a big part of this and here, CUK serves an invaluable purpose since its search engine results seem amazingly good for topics like this. The community here helps massively too. If education is important, maybe HMRC should make a point of much more high profile campaigns in the media instead of low profile search light bulletins on their website. One very worrying trend though is the abuse of the term "umbrella company". Reputable companies must be sick to death of tax scams calling themselves umbrella companies. How this is tackled, I don't really know.

[SueEllen]

A discussion for general. However for a drug trade to exist requires pushers and users. I agree with what you say, however I would like to see both ends tackled.

Needs to get more media attention before there is even a chance of HMRC going after the pushers.

[BrilloPad]

Why would they? It's up to you to pay the correct taxes...

A discussion for general. However for a drug trade to exist requires pushers and users. I agree with what you say, however I would like to see both ends tackled.

[Moumunne]

That explains it all. Thank you for all your answers.