Umbrella Company?

#1
I gave been offered a contact with an agency who does not want to pay me as PAYE.
But want to me to set up as an Umbrella Company, what are the pro's & con's with this?
I want the work, but do not want to get shafted by agency or HMRC!
 

goodoldboy

MIA
Book Reviewer
#2
I gave been offered a contact with an agency who does not want to pay me as PAYE.
But want to me to set up as an Umbrella Company, what are the pro's & con's with this?
I want the work, but do not want to get shafted by agency or HMRC!
Do you know - or have recommendations of - a decent accountant? That will be your first step unless you want to gen up from the interweb.
 
#5
Defo get an Accountant, you don not want to get hit by HMRC.
 
#7
Do you know - or have recommendations of - a decent accountant? That will be your first step unless you want to gen up from the interweb.
^
Wot 'e said.

Like solicitors, accountants will give you half an hour or so of free advice to help you decide if you wish to retain their services going forward. Use it.
 
#8
If you register with an Umbrella company you need to know about IR35 and HMRC's view.

If you don't pass the HMRC test you will end up paying full PAYE/NIC on all your earnings with minimal allowances for e.g. PPE. Umbrella companies are pretty much a busted flush.

You could set up a Private Limited Company (as I have done) but HMRC will still check you for IR35 compliance. Thankfully the work that I do means that I don't fall under IR35.

Check employment status for tax - GOV.UK
IR35 Test: Free Online Status Check for Contractors

Unless you can demonstrate the following, you will probably get hit by IR35:

Can you substitute someone else for the work you do?
Do you attend a single place of work
Does your employer provide equipment for you e.g. laptop, van etc
Are you paid hourly / weekly (as apart from doing fixed price jobs)

There may be some others that I can't remember but the 2nd link will help.

I would advise avoiding umbrella co's if at all possible and get a good accoutant at all costs!
 
#9
I may need an Umbrella Company soon. I've done a lot of research and it would seem that those offering the highest % take home against gross are one step ahead of the tax man and the next in line for IR35 scrutiny. Why chase Starbucks for billions when they can chase Bob for a couple of grand?
 
#10
I may need an Umbrella Company soon. I've done a lot of research and it would seem that those offering the highest % take home against gross are one step ahead of the tax man and the next in line for IR35 scrutiny.

Why chase Starbucks for billions when they can chase Bob for a couple of grand?
Because the little guys can't afford to fight back & don't have headquarters in Luxembourg.

HMRC are tightening up and will be working through a lot of umbrella companies over the next few years.

IR35 tests will be applied to all workers under the umbrella company banner. HMRC can, and often will, backdate the tax that they consider is owed.

Basically, if you attend a single place of work, have fixed working hours and cannot substitute someone else to do your job then you will almost certainly be considered as "employed". Similarly, if you are paid by the hour and earn about the same each week / month then you are technically employed, regardless of whether this is via an agency or an umbrella company.

For myself:
  • Although I have a desk in an office, I travel widely and don't have fixed work hours
  • I provide my own equipment (laptop, PPE, vehicle etc)
  • I can (and do) substitute other people to work on my behalf (I get a proportion of their earnings)
  • 95% of my work is on fixed price contracts (I take the risk of cocking up)
  • I have Professional Indemnity and 3rd party insurance
I fall outside of IR35 and run a Private Limited Company with an accountant who does my tax calcs.
 
#11
My son's experience.
Went with umbrella. Happy for a time, then his sister, an accountant, looked at the way they were doing things. She took over his affairs and saved him an accountant fee straight off.
Might be biased, but would go with a professional.
 
#12
I am with an umbrella Company and have been for the last couple of years. I couldn't get the agency work I now have without it. I did speak to my old accountant before signing anything, she checked it out and said it was all good and above board and HMRC would not be bothering me.

Upside: I don't have to worry about sorting out tax and NI. I get holiday pay. I get a payslip with a registered tax number so It's a lot easier getting credit as an proper employee.

Downside: I am not on a big wage so the fees do bite into my take home.

I have read all about the horror stories about umbrella Companies, but it appears that I am with a good one and I'll stick with it until something else comes up.

It absolutely does make sense to speak to an accountant first though.

Edited to add: There are at least 10 threads on the subject here: Search Results for Query: umbrella company | Army Rumour Service
 
#14
I know the guy behind Think Accounting, New Wave and Igloo. I even used to share an office with him. I will be very, very careful if and when I need an Umbrella company.
 
#15
I gave been offered a contact with an agency who does not want to pay me as PAYE.
But want to me to set up as an Umbrella Company, what are the pro's & con's with this?
I want the work, but do not want to get shafted by agency or HMRC!
Sorry, a bit confused as its unlikely they are asking you to set up as an Umbrella Company, normally they'll either ask you to register with their third party/s payroll provider/s or to set up as a limited company.

If its the first option, the payroll provider should be able to offer you a range of options including PAYE, if its the second option, report them to HMRC and the REC for non compliance as you should not be directed to set up a limited company.

Personally speaking, any agency using forcing applicants to use either of those two options should be shot.
 
#16
@Dark_Nit

Yours has Gotta be the biggest bite today.
 
#17
Fair cop.

But there is or was a similar contracting umbrella co in the UK.

Guilty to not reading the post properly. ;)
 
#18
I gave been offered a contact with an agency who does not want to pay me as PAYE.
But want to me to set up as an Umbrella Company, what are the pro's & con's with this?
I want the work, but do not want to get shafted by agency or HMRC!

Seek the best advice from paid professionals! Mate of mine had been working for TRAC (Offshore Inspection) and was convinced he was doing everything correctly and above board. HMRC turn up at his door one morning, "Right, switch that computer off, where`s your phone and where are all your papers?"

Couple of hours later, " Looks like you owe £38,000 and we want it in seven days!"

Even worse, TRAC must have got wind of what was going on and turned their back on him. After 10 years working for them, he`s hasn`t lifted a finger for them since that day. Lost his house, car and anything of value. Nearly lost his mind.

Simply, get professional advice!
 
#19
I gave been offered a contact with an agency who does not want to pay me as PAYE.
But want to me to set up as an Umbrella Company, what are the pro's & con's with this?
I want the work, but do not want to get shafted by agency or HMRC!
Having just retired from the construction industry, and being self employed, we were all forced to go either PAYE of limited company, I went PAYE, working through the agency's, but being paid through a third party , which stung me for between £15-20 per week, handling fee, your expenses will be returned with receipts submitted, and you get paid weekly- fortnightly. Your alternative is to register as a limited company. I have no knowledge of this procedure.
 
#20
Problem is too many people took the proverbial.

I know the guy that set up Contractor Financial; I did the pensions for many of the big umbrella operators. Top tip is to avoid those set up in the IoM.
 
Thread starter Similar threads Forum Replies Date
fltpilot Finance, Property, Law 19
phil245 Blue Jokes 47
Berlin_104s Jobs (Discussion) 13

Similar threads


Latest Threads

Top