Despite many agencies now instructing contractors to only use FCSA accredited umbrellas, the marketplace is still full of dubious payment providers.
Unfortunately when a contractor is offered a unrealistically high take-home pay, they are willing to push and push the agency until they can use the umbrella. This causes problems for everyone especially the contractor. It becomes a slippery slope for all involved where word spreads between the agency workers and more and more begin to use the umbrella.
HMRC are trying to crackdown on these unscrupulous umbrellas but as one closes, another takes its place.
With the planned implementation of IR35 in the private sector we have seen an increase in the number of non-compliant umbrellas offering their ‘too good to be true’ services before the change is made. Take-home rates that seem to ignore or disguise non-compliant HMRC contributions can be very appealing when compared to a compliant solution. Contractors that do use these companies either willingly or through being deceived could end up facing serious problems, ranging from not getting paid for their work to facing enormous, life-crippling tax bills.
The Bells Are Ringing
All legitimate and compliant umbrella companies should operate under the same rules set out by HMRC. All contributions are worked out on what a contractor earns so all quotes given by umbrellas should be similar to one another with the only financial difference being what the umbrella charges for their service.
If an umbrella is offering a significant increase over the majority of quotes given by umbrellas then this is most likely because they are doing something non-compliant or illegal.
Ask And You Should Receive
When you speak to an umbrella for a quote always ask for a breakdown of the deductions and ask them to send you the pay illustration. This should show you what deductions go where and the amount of the deduction. If the figures don’t match up or if something looks uncharacteristically low then question it as YOU may be held account able in the future.
Loan Schemes Or Disguised Remuneration
Umbrellas that offer loan schemes effectively allow individuals to fraudulently evade paying taxes by paying the contractors wage by means of a ‘non-repayable’ loan which isn’t subject to tax. This allows the operator of the scheme to levy an attractive ‘fee’ without having to much of an impact on the contractor’s final take home wage.
Some of these scheme providers will pay a minimal amount through standard PAYE with the remainder of your pay being paid to you as some other disguised form. Since loan charge schemes were cracked down we have seen other schemes take their place. Basically the same scheme under a different name.
Remember, you should always be paying tax and National Insurance contributions (employees & employers (NIERS)), with the tax usually working out around the 20% mark of your wage. Other than that the only other non-voluntary deduction will be the fee taken by the payment provider.
Don’t Buy From The Back Of A Lorry
The best way to avoid getting caught out by an unscrupulous provider is to always use an FCSA accredited umbrella. By becoming a member an umbrella has passed the rigorous standards set by the FCSA. Having committed to the FCSA Compliance Code, the accreditation assures you that the umbrella operates legally, compliantly and with a contractors best interests in mind.
A Complaint Umbrella Will:
- Be fully transparent, from your first phone call to your last day and beyond
- Take you on as an employee ensuring they are accountable for you
- Ensure that you are paid the full compliant amount that is subject to PAYE tax and NICs
- Show all deductions clearly on your payslip
- Auto-enrol you into a company pension scheme
What We Also Offer:
- Dedicated Account Manager for each contractor
- Same day payments – Daily, weekly & monthly payroll based on your agencies preference
- Uplifted Agency Rate due to you using an external payroll provider
- Staff Treats – Discounts at over 3,000 brands such as Vue, Apple, M&S, Zara and Starbucks. Staff Treats is the leading employee benefits and discounts provider in the UK.
- Employment history. The longer you are with us, the longer employment history you generate. This helps with any applications that ask ‘how long have you been with your current employer’.
- 30 Million pounds of insurance cover (including Professional Indemnity Insurance)
- Smart Pension. funds are only invested in blue chip providers. Investment proposition is secure and sophisticated
- Mobile responsive online portal – 24hr access to your payslips
- SMS & Email notification when payment is made to you
- Simple set up – contractors can be set up within an hour
If you are currently looking for an exceptional and compliant umbrella then look no further. Payments Pro Umbrella is one of the UK’s most transparent and reliable umbrella providers. Give us a call on 020 3819 7220 and speak to one of our Dedicated Account Managers to find out how we can help you.