Umbrella companies

rmg1

Hi all

This is my first post on this forum, so apologies if it's in the wrong place.

I'm a contractor which means I work through various employment agencies for different companies.
I use an umbrealla company for doing my tax/NI and to claim back business expenses (mileage and subsistence).
Because of a change of employment agency, I've been forced to change my umbrella company because the one I was with wasn't on the approved list of the employment agency.
2 questions:
1) Can they do that?
2) If they can't, how do I sort it out?

All help/advice greatfully received.

rmg1

Anyone?
Please?

SteProud

Hi there

I work for an umbrella company so I am not impartial but happy to give a view if that's OK.

You can not be forced into working with any umbrella company and are free to leave at any time if you are not happy with the service you are getting.

However, the reason that more and more agencies are using prefered supplier lists is because some of the dodgy umbrella companies and offshore scheme providers have suffered due to their own bad practice (abusing expenses dispensations etc), poor management or new government legislation such as the 20011 Finance Act. All these aspects have meant that some umbrella companies are risky for the agent and the contractor to use. As a result, many of the larger agencies will only work with FCSA members.

I'm sure you've heard stories of umbrella companies going bust without paying their contractors., As a result, agencies have had to pay twice so they are now covering themselves by only working with umbrella companies that behave in a certain way that reduces this risk and have gone through a complete and transparent audit as part of the FCSA code of conduct (freelancers and contractors services association), with the results presented to HMRC. There are other umbrella kite marks out there but all have seem members go bust so the kite mark was worthless in the end and was a simple marketing exercise.

It also protects the contractor. Yopu should have a contract if employment with any umbrella company you work for and they should be providing you with all the relevant employee rights and statutory payments (e.g. sick pay ect). If they don't, again you aren't supported and your agency is liable. You should have just as much access to HR support as I do sat here in the office.

The full employment contract also ensures you can legally claim travel and subsitence expenses as its the only way your client site can be classed as a temporary work place.

Has you agency given you any indication why the umbrellas on their list are on there? It might actually be better for you, especially as the Agency Workers Regulations come into effect later on this year.

I can give you some links to independent contractor sites that will go through this in more detail if that's useful for you? just let me know.

Likewise if you've got any more questions?

rmg1

Thanks for the info.
As part of my first two contracts, I used a compnay called FPS who basically did all the work for me. I just ticked a few boxes at the end of the week, entered my mileage and they did the rest once my timesheet had been approved from the agency website.
My current agency won't use FPS until they go through an "approval" process which can take up to 6 months.
I just wondered if I can go back to FPS and basically force my agency to accept the fact?

SteProud

rmg1 wrote: »

Thanks for the info.
As part of my first two contracts, I used a compnay called FPS who basically did all the work for me. I just ticked a few boxes at the end of the week, entered my mileage and they did the rest once my timesheet had been approved from the agency website.
My current agency won't use FPS until they go through an "approval" process which can take up to 6 months.
I just wondered if I can go back to FPS and basically force my agency to accept the fact?

I've not heard of FPS before and just checked their website and they are based in the Isle of Man. Do you know if you are paying tax and NI on all your earnings after expenses or are you payed via some kind of loan etc?

The finance act of 2011 which was announced by the Govt in December is clamping down on tax avoidance and as a result, some of the Isle of Man umbrellas are experiencing difficulties and may go out of business (I don't know if this is the case with FPS though). This could be the issue your agency has and they don't want to be left liable for your tax bill.

rmg1

According to my payslip from FPS, I've been paying Tax and NI as normal. The payslip looks a little bit different to the one's I'm used to, but that's because they take off my expenses before they remove any tax and NI and put the expenses back on. Think I might take one into my local tax office at the weekend (providing it's open) and get them to have a look.

SteProud

Its sounds exactly like the ones we do here at Parasol.

Without knowing all the details the fact they are based in the Isle of Man is the only thing I can think of that might be making your agency nervous and they will be investigating the umbrella from a tax avoidance point of view.

Technically your agency cannot force you to work with a particular umbrella and you should be free to leave at any time as well. In reality though agencies are increasingly protecting themselves for dodgy umbrellas.

Do you see yoursewlf being worse off as a result of working with one of theirs?

If you want to PM me with the umbrellas they are suggesting you work woth I'm happy to give you a view as to why they are on the list and your current umbrella isn't.

I am not impartial though as I do work for an umbrella.

rmg1

I don't think I'm any worse off, it's just that things are more fiddly with my current umbrella company.
With FPS, all I had to do, was tick the boxes for the days I'd worked (selecting either 1 or 2 meals) depending on how long I'd been out of the house), supply my mileage and that was it.
With my current one, I have to submit a timesheet so they can cross-reference against the agency time-sheet, submit my mileage (with petrol receipts) and work out my subsistence claims on a daily basis.
I'll drop you a PM with the list I was sent.

SteProud

rmg1 wrote: »

I don't think I'm any worse off, it's just that things are more fiddly with my current umbrella company.
With FPS, all I had to do, was tick the boxes for the days I'd worked (selecting either 1 or 2 meals) depending on how long I'd been out of the house), supply my mileage and that was it.
With my current one, I have to submit a timesheet so they can cross-reference against the agency time-sheet, submit my mileage (with petrol receipts) and work out my subsistence claims on a daily basis.
I'll drop you a PM with the list I was sent.

Thanks for that, and it makes a bit more sense now.

Based on your last post where you talk about your mileage and meal (subsistence) expenses, its sounds like FPS have been a little lax in their expenxses policy. Unfortuneatley you do have to keep receipts for all your expenses even if the umbrella doesn't need to see them.

So the bit where you select 1 meal or 2 is the bit that HMRC could get miffed about and accuse the umbrella of abusing their expenses policy.

The agency could be held liable for any outstanding tax that HMRC deems due as a result, hence why it takes so long for them to look into FPS's books.

I'll reply to your PM now.

rmg1

Now I'm starting to get a bit nervous. :eek:

I didn't keep any receipts while I was with FPS and I can only prove what I paid for in petrol via a bank statement (most of it went on the debit card).
I'm keeping receipts now, but could I get fined/have to pay back taxes for the time I was with FPS and claimed without receipts?

Also, just checked the web-site you sent me, what do I do about a tax return? Does my umbrella company complete it?

SteProud

Don't worry, just make sure from now on you keep all your receipts and don't believe any umbrella company that tells you otherwise.

Its unlikely that HMRC will investigate you as an individual so I think you will be fine. Just adopt it as best practice moving forward.

Just goes to show that there are some realy poor practices out there in the umbrella market!

No you don't need to complete a tax return as legally you were the employee of the umbrella company. You should get a P45 from FPS though when you resign from them before you join the new umbrella.