Outside IR35 but still use Umbrella?

[Andy Hallett]

Possibly the best example of "a little knowledge being dangerous" i have seen for a while. The agency has a B2B relationship, as the fee-payer going umbrella further de-risks any liability for them.

Send them my details as they clearly need consultancy.

[lucyclarityumbrella]

Sorry, missed this. See my recent post above with their reasoning. Wasn't specific to the outfit I chose.

I would speak with a gooc contractor accountancy provider who can be honest and advise as to which would be the best route, as they can look at the length of the assignment, your earnings etc. But as NorthernLad said if it is your first time contracting and you want to concentrate on your assignment then umbrella is going to be a slightly more hassle free option.

[eek]

Thanks for all of the replies. Agency has said the following:

Client have deemed the role outside of IR35 therefore expect a Contractor and if someone goes via an Umbrella company they are effectively an ‘agency worker’. Our legal team have advised that this could cause an issue if the HMRC decide to review.

I've spoken the the Umbrella company who also offer Accountancy / Ltd company services. They've shown me what my earnings would be Ltd vs Brolly and difference in monthly fees etc.

Is it a huge administrative headache if I went Ltd and then after the contract decided that contracting wasn't for me? Hard to know what to do at this point.

It's more work for you and would cost at least £1000 to £2000 rather than the £400 an umbrella would cost you in the same 4 month period.

I'm at a loss as to why anyone would think HMRC cares about Agency workers because you won't be one, you would be an employee of the umbrella - and that would be no different from the client going to Accenture and Accenture sent in an employee.

[cascade20]

Wise choice. I did the same I don't regret it one iota. Plenty of others started out this way as well. We've plenty of people on the board on outside gigs through an umbrella and I've never heard of them refusing a brolly before.

I'd also suggest speak to Lucy at Clarity and get her to speak to them. Did you ask the agency exactly why they wouldn't except it though? Was it the outfit you picked or just any umbrella engagement at all? And their reasons?

Sorry, missed this. See my recent post above with their reasoning. Wasn't specific to the outfit I chose.

[cascade20]

Thanks for all of the replies. Agency has said the following:

Client have deemed the role outside of IR35 therefore expect a Contractor and if someone goes via an Umbrella company they are effectively an ‘agency worker’. Our legal team have advised that this could cause an issue if the HMRC decide to review.

I've spoken the the Umbrella company who also offer Accountancy / Ltd company services. They've shown me what my earnings would be Ltd vs Brolly and difference in monthly fees etc.

Is it a huge administrative headache if I went Ltd and then after the contract decided that contracting wasn't for me? Hard to know what to do at this point.

[GregRickshaw]

You can certainly use and Umbrella outside, even if the role is deemed inside.

Not sure what objections the client/agency can have other than possibly a reduced fee, I was led to believe the price the agency receives from the client is untouched by the contractor's status.

I have used an Umbrella for nearly 3 years now, went inside before IR35 really struck home, and despite most of my roles being deemed outside of IR35 I have never once regretted it.

It's a strange request at best, at worst it's heading towards under-handed

[northernladuk]

Wise choice. I did the same I don't regret it one iota. Plenty of others started out this way as well. We've plenty of people on the board on outside gigs through an umbrella and I've never heard of them refusing a brolly before.

I'd also suggest speak to Lucy at Clarity and get her to speak to them. Did you ask the agency exactly why they wouldn't except it though? Was it the outfit you picked or just any umbrella engagement at all? And their reasons?

[eek]

I wonder if it's a misunderstanding of how the Bribery Act 2010 and Criminal Finances Act 2017 work in regards dodgy umbrellas alongside a once caught, twice shy logic from the agency.

My advice would be speak to an umbrella and see what they can do to explain to the agency that they have nothing to fear. Clarity and Ocra paygroup should be able to solve any fears that the agency has.

[cojak]

Not an unreasonable option considering your circumstances and reasoning. No, a Ltd is not compulsory for an outside IR35 contract. I would certainly expect to be able to use an umbrella in your position.

[cascade20]

About to start my first contracting role (initial 4 months). Due to the short duration and first role, I decided to go Umbrella despite the role being outside IR35.
All fine until at the 11th hour the agency says that I cannot do this and have to set up my own limited company...

Does this sound right? I'm aware of the perks of going limited, retain a higher % of income, etc - but also aware of the admin headache and work involved and it isn't something I really wanted to do especaially if the contract doesn't get renewed or I conclude that contracting isn't for me.

What are my options?