Banks no longer accept umbrella companies

[Steven@Parasol]

I heard that in the last few months many banks are refusing to take on contractors who are working through an umbrella companies, two contractors I know had huge issues with the bank they are working with already as they were told the bank is not willing to deal with their umbrella company, another contractor who was applying for another IB was told new regulations means they will avoid dealing with umbrella companies... anyone knows detail about this?

Apologies if already discussed

I think I've found a bit more info on this.

Last week the Govt. announced new legislation that effectively shut down the practice of using EBTs to defer or avoid tax (The Finance Bill 2011).

Standard Life has been quotyed as saying that contractors who use EBTs may now have problems.

Can I just stress that EBTs are not umbrella companies but this could be the reason your colleagues are having difficluties.

Correctly sturctured umbrella companies do not use offshore schemes to offer contractors unrealistic amkunts of take home pay.

[LisaContractorUmbrella]

I totally agree with Steve - there is absolultey no reason at all why banks would have an issue with someone working with an umbrella company. Although we are still waiting for official guidelines, which will be published a mere 6 months before the legislation comes into force, there is nothing to indicate that there is anything contained within the legislation that does anything other than offer extended protection to agency workers.

[Papavar]

I work in Financial Services and am in a team of contractors, at least half of us are working via Umbrella and all have just had contracts renewed for 6 months. It might be that AWR hasn't kicked in yet, but I've heard absolutely nothing about it being an issue so far...

[Steven@Parasol]

I heard that in the last few months many banks are refusing to take on contractors who are working through an umbrella companies, two contractors I know had huge issues with the bank they are working with already as they were told the bank is not willing to deal with their umbrella company, another contractor who was applying for another IB was told new regulations means they will avoid dealing with umbrella companies... anyone knows detail about this?

Apologies if already discussed

Hi there. I work for Parasol and we currently work with 9,000 contractors and we have not heard anything like the cases you mention.

From what we have seen in the legislation and in our conversations with BIS, OTS and HMRC, there is no reason whatsoever that your friends should have had problems because they are working through an umbrella company.

If they are working through a correctly structured umbrella company then there should be an over-arching contract of employment in place which, in the eyes of the law, makes them an employee of their chosen umbrella and as a result they should have access to full employment rights, including sick pay and holiday pay, as a result.

When the AWR comes in October next year, umbrella working should remain a perfectly legitimate way for contractors to go about business if they so wish.

The guidance on the new legislation is not expected until April but for anyone wanting to read into the legislation, read the legislation itself, or look into a few industry viewpoints or opinions then www.understandingawr.co.uk is a good place to start.

There is a video on there of our CEO explaining why AWR is not a concern for correctly structured umbrella companies.

There is actually a potential advantage for end clients and agencies working with umbrella companies who operate in this way. As the umbrella company is the employer of record, all the liability for employee rights sits with the umbrella. So it is the umbrella that would be taken to tribunal etc.

Hope this helps.

[TykeMerc]

I believe it's to do with the amended agency workers regulations, I noticed them mentioned in my accountants newsletter and issues with people working via Umbrellas having employee like paid holidays, sick leave etc rights. The banks might have valid concerns.

I'm ashamed to say I only skim read it as it wasn't relevant to me, I'll see if I've still got it.

[zamzummim]

I heard that in the last few months many banks are refusing to take on contractors who are working through an umbrella companies, two contractors I know had huge issues with the bank they are working with already as they were told the bank is not willing to deal with their umbrella company, another contractor who was applying for another IB was told new regulations means they will avoid dealing with umbrella companies... anyone knows detail about this?

Apologies if already discussed