Tax efficient umbrella companies v Standard umbrella

savvysearcher

Hi, just need some advice as to what I hear are called 'tax efficient' umbrella companies (also known as alternative umbrella companies) as opposed to standard umbrella companies. As a locum worker I am currently using a standard umbrella company but having secured a new assignment my agency has given me a name of a 'tax-efficient' umbrella company.

I have spoke to the umbrella company directly and they state they are based in the UK therefore not off-shore. They are able to provide me with a net weekly pay significantly higher than a standard umbrella company. They say they do this via applying slightly differing rules than a standard umbrella company which they say are totally compliant with HMRC guidelines/UK laws. Seems almost too good to be true though I am tempted to go with them given the increase in my net pay compared to a standard umbrella. Anyone know whether these tax efficient/alternative companies are legitimate - I don't want to register with them only to find out the HMRC regards going with them as tax avoidance and asking for me to pay back monies I saved via going through them.

Thanks in advance

getmore4less

Ask them what they are calling the money they don't tax or NI but pass onto you.

Ask them for a worked example based on your previous job.

chrismac1

Ask for specifics. Ask them exactly what the different rules are that they are applying compared to standard umbrella companies. Then come back here and post up what these are. Then we'll shoot them down in flames.

This area has been littered with schemes that save lots of tax for people like you - until they fail. Then the agents exit the scene at 100mph leaving people like you to face the music with HMRC. I'm not saying these guys are definitely like that, just that the odds are not stacked in your favour.

System

If they are claiming that they have 'special' dispensations or expense policies 'approved by' the Inland Revenue, that claim to allow expense claims without the need to produce receipts.then it's a load of bull and HMRC are actively investigating any schemes like these.

In the end it is you that ends up picking up the bill when it all falls apart.