umbrella companies

trailingspouse

We use sub-contractors from time to time. In the past we've always used people who had formed their own ltd companies. The sub-contractor we currently want to take on works through an umbrella company - can anyone tell me how this will be different for us?

Presumably we get an invoice from them and pay them just as we would someone working through a limited company? Do they add VAT? We're VAT registered but the sub-contractor isn't.

Rappa

trailingspouse wrote: »

We use sub-contractors from time to time. In the past we've always used people who had formed their own ltd companies. The sub-contractor we currently want to take on works through an umbrella company - can anyone tell me how this will be different for us?

Presumably we get an invoice from them and pay them just as we would someone working through a limited company? Do they add VAT? We're VAT registered but the sub-contractor isn't.

You will need to enter into a contractual agreement with the umbrella company.
The umbrella company will invoice you in accordance with the contract.
The umbrella company will almost certainly be registered for VAT (but you should double check their registration before paying VAT, just as you should with any one else charging you VAT)

trailingspouse

Thanks - that's what I was hoping.

paddyrg

Just to add - the contractor's vat position becomes irrelevant to you, all you'll care about is that of the umbrella company. Be very clear in your own mind and paperwork that you're not employing the contractor, so there's no confusion. Likewise, they should probably be denied access to anything that could be considered staff perks (I know the big multinational I worked for had an issue when a contractor managed to argue that they had some employment rights by being a defacto hidden employee because he'd had use of the on site health centre, staff discounts on product, etc. Very cheeky of him to try to claim a pension etc from company. Some out of court settlement, but it immediately meant contractors were denied any niceties!

trailingspouse

Thanks - yes, I'm up to speed with IR35 and such, that's why we normally use limited companies.

TheTracker

trailingspouse wrote: »

We use sub-contractors from time to time. In the past we've always used people who had formed their own ltd companies. The sub-contractor we currently want to take on works through an umbrella company - can anyone tell me how this will be different for us?

Presumably we get an invoice from them and pay them just as we would someone working through a limited company? Do they add VAT? We're VAT registered but the sub-contractor isn't.

Not different. Pay the Umb as you would Ltd Co, in fact they probably are one. Pay VAT if they charge it

trailingspouse

As far as I can see, the only difference is that the sub contractor will get less than he would if we dealt directly, as he'll be paying their fees. But then again, he doesn't have the costs of setting up as a limited and running a business, so I guess it's swings and roundabouts for him. And makes no difference to us.

Many thanks for all the replies.

paddyrg

trailingspouse wrote: »

As far as I can see, the only difference is that the sub contractor will get less than he would if we dealt directly, as he'll be paying their fees. But then again, he doesn't have the costs of setting up as a limited and running a business, so I guess it's swings and roundabouts for him. And makes no difference to us.

Many thanks for all the replies.

Basically, yes. :-)

InsideInsurance

trailingspouse wrote: »

As far as I can see, the only difference is that the sub contractor will get less than he would if we dealt directly, as he'll be paying their fees. But then again, he doesn't have the costs of setting up as a limited and running a business, so I guess it's swings and roundabouts for him. And makes no difference to us.

Many thanks for all the replies.

Yes, just the Ltd you contract with is the umbrella rather than his. He is still an employee of the Ltd you are contracting with etc