Minimum standards

[webberg]

Would it be a good idea if those seeking the business of contractors via whatever route, adhered to a minimum standard and possibly a common template in how they present information?

Would this allow a fair comparison between offerings rather than contractors needing to unpick the small print or the unsaid elements of what is offered to them?

Do we think that those with the resources and the knowledge and the awareness of how contractors have been treated by HMRC and promoters in the past, have some sort of duty to be transparent and honest?

Or are we happy that we continue to see slick sales patter and misleading quotes?

And yes I do have a very small vested interest in this but mostly it just boils my p**s that certain outfits consider that their imperative to make fees can allow them to repeat the past.

[ladymuck]

I can see value in this. Much like all mortgage quotes have to contain proscribed information about the loan, a quote from an umbrella company should contain the same data so it is possible to do a like for like comparison.

[DolanContractorGroup]

Hi webberg,

Compliant umbrella companies and accountancy providers do provide the assumptions used in their pay illustrations. And these illustrations are what most contractors rely upon before joining a particular company. Unfortunately, those that aren't compliant won't be deterred from using misleading figures.

Maybe we'll see this information being presented in a different way in the near future. With the forthcoming changes by the EAS Inspectorate as proposed in the 'Good Work Plan', coming into effect in April 2020, agency workers will be given a 'key facts' page stating facts relating to their working status and pay. Agencies - if they use PSLs - could potentially highlight information in the same way for all of the umbrella/accountancy companies they deal with.


Kind regards

Zeeshan

[lucyclarityumbrella]

Would it be a good idea if those seeking the business of contractors via whatever route, adhered to a minimum standard and possibly a common template in how they present information?

Or work on the basis that if a company cannot or will not explain how the figures are arrived at then look elsewhere? Every company should be able to provide a breakdown of exactly how the figures have been arrived at, maybe look for those who will do that right from the outset?

Trying to police this industry is a nightmare - the only people who should be able to confirm if a company is compliant is HMRC and they still won't rubber stamp anything.

[malvolio]

It's an excellent idea, but I fear the problem is the market, not the service. Too many contractors take no notice of little things like due diligence or understanding the environment in which they now operate, so are blissfully unaware of serious things like IR35, Loan Schemes and all the other risky options. They will continue to look for the best ratio of gross to net income regardless of legality, and many simply ignore how the intermediate company - theirs or an umbrella - actually operates.

Educate the workers themselves and caveat emptor might then mean somehting.

[DolanContractorGroup]

Or work on the basis that if a company cannot or will not explain how the figures are arrived at then look elsewhere? Every company should be able to provide a breakdown of exactly how the figures have been arrived at, maybe look for those who will do that right from the outset?

Trying to police this industry is a nightmare - the only people who should be able to confirm if a company is compliant is HMRC and they still won't rubber stamp anything.

Hi midlandlass,

Now that the Employment Agency Standards (EAS) Inspectorate has been given more power in this area, and one of their duties is to define what exactly an umbrella company is, there's a good chance that we may soon have a "black and white" idea as to how umbrella companies should operate; more so than any trade body in our industry has achieved so far.

Any business that doesn't fit into the definition simply cannot be called an umbrella employer.

It's an excellent idea, but I fear the problem is the market, not the service. Too many contractors take no notice of little things like due diligence or understanding the environment in which they now operate, so are blissfully unaware of serious things like IR35, Loan Schemes and all the other risky options. They will continue to look for the best ratio of gross to net income regardless of legality, and many simply ignore how the intermediate company - theirs or an umbrella - actually operates.

Educate the workers themselves and caveat emptor might then mean somehting.

Hi malvolio,

I agree completely. The main concern for contractors is their earnings, and there's nothing wrong with that, but it shouldn't be at the detriment of other important issues.

Unfortunately, focusing too much on pay increases the risk on other factors.


Kind regards

Zeeshan

[webberg]

We now have a second illustration from an umbrella - well known and a member of a trade body - which is, in our opinion, misleading.

I get that contractors focus on "take home" but in the illustration that value is artificially high because no account is taken of limiting personal allowances and an assumption that the limited range of tax free allowances is used to the max - quite unrealistically.

I fear that the inevitable settling of the additional tax due will be a shock - and perhaps an unaffordable one.

[DolanContractorGroup]

We now have a second illustration from an umbrella - well known and a member of a trade body - which is, in our opinion, misleading.

I get that contractors focus on "take home" but in the illustration that value is artificially high because no account is taken of limiting personal allowances and an assumption that the limited range of tax free allowances is used to the max - quite unrealistically.

I fear that the inevitable settling of the additional tax due will be a shock - and perhaps an unaffordable one.

Hi webberg,

You are right, that calculations could be quite off if not catered to individual circumstances.

It may be worthwhile going back to the umbrella company and seeing if the calculation can be tweaked to take into account realistic allowances. I don't think that compliant companies try and mislead intentionally, they just go by figures that they assume would apply to the majority of workers.

We would be glad to help with this too, and see if our calculations are up to your expectations.


Kind regards

Zeeshan

[webberg]

Here's a challenge to all those providing quotes on umbrella terms.

Assume that our hypothetical contractor has a contract worth £3,000 a week for 6 months. She expects to renew that on similar terms for a further 6 months.

Contract starts 1st July 2019.

Expenses will be minimal. Client has no interest in "benefit" packages involving salary sacrifice.

What would be the quoted monthly take home?

[DolanContractorGroup]

Here's a challenge to all those providing quotes on umbrella terms.

Assume that our hypothetical contractor has a contract worth £3,000 a week for 6 months. She expects to renew that on similar terms for a further 6 months.

Contract starts 1st July 2019.

Expenses will be minimal. Client has no interest in "benefit" packages involving salary sacrifice.

What would be the quoted monthly take home?

Hi webberg,

According to our calculator, and it's a standard umbrella calculator assuming that the tax code is 1250L and there are no other income sources this tax year, the monthly take home pay (on £12k gross pay per month) is £6802.93.

This shouldn't be much different to calculations provided by other umbrella employers. The only difference should be the margin.

I have also PM'd you the branded illustration with the breakdown. Didn't want to be accused of overt advertising on here

I hope this helps.


Kind regards

Zeeshan