Originally posted by mike67
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Forced to use umbrella??
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merely at clientco for the entertainment -
Originally posted by eek View PostThe fear is how do they know its not a dodgy tax scam.... That check is a lot harder than you may think....
The risk is (at the moment) primarily on the contractor if they accidentally or deliberately use a dodgy "umbrella company" as many have found out. The risk to the agency is more reputational, ie they could be seen as facilitating in some way the tax avoidance. If they have taken reasonable care in vetting an umbrella company they should be fine. A decent agency should be able to do some basic checks within about 20 mins.Comment
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Originally posted by mike67 View PostThe due diligence process for an agency working with a new umbrella should be similar to that done by a contractor working through them. I think we all know that anything above 60% take home, anything that involves loans, trusts or foreign currency, anything offshore, anything that has been checked out by a QC(!) is likely to smell. Then chuck in a quick check on Companies House to see how long they have been around, and if it isn't long whether the directors have just liquidated another business. And a quick check on forums like this.
The risk is (at the moment) primarily on the contractor if they accidentally or deliberately use a dodgy "umbrella company" as many have found out. The risk to the agency is more reputational, ie they could be seen as facilitating in some way the tax avoidance. If they have taken reasonable care in vetting an umbrella company they should be fine. A decent agency should be able to do some basic checks within about 20 mins.merely at clientco for the entertainmentComment
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Originally posted by mike67 View PostThe due diligence process for an agency working with a new umbrella should be similar to that done by a contractor working through them. I think we all know that anything above 60% take home, anything that involves loans, trusts or foreign currency, anything offshore, anything that has been checked out by a QC(!) is likely to smell. Then chuck in a quick check on Companies House to see how long they have been around, and if it isn't long whether the directors have just liquidated another business. And a quick check on forums like this.
The risk is (at the moment) primarily on the contractor if they accidentally or deliberately use a dodgy "umbrella company" as many have found out. The risk to the agency is more reputational, ie they could be seen as facilitating in some way the tax avoidance. If they have taken reasonable care in vetting an umbrella company they should be fine. A decent agency should be able to do some basic checks within about 20 mins.'CUK forum personality of 2011 - Winner - Yes really!!!!Comment
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Originally posted by Zippydill123 View PostI have worked via my own ltd company in the private sector for the past few years. Am now looking into my first public sector contract and have been told that the client requires contractors to use an umbrella company, not ltd.
My Ltd. company owns a small office that it is paying a mortgage on, so I need it to keep earning and have accounts that I can present to the bank when the 5 year review comes up. If I was forced to switch away to an umbrella it just would not work for me, unless I could somehow contrive a way of flowing that income through the ltd. without incurring more taxes on it..?
It is definitely not true that you _have_ to work through an umbrella. In fact working through an umbrella means that IR35 does not apply, since you are just an employee of the umbrella and already paying income tax and NI. IR35 only comes in when a ltd. company is deemed to be actually providing a contractor as an employee, in which case the tax is taken out before your invoice is payed, and the ltd. does not incurr further taxes on this amount.
I think I am going to apply for the job anyway - if they offer it to me I will only take it if I can continue through my ltd. If not, it will be a good practice interview.Comment
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Originally posted by willendure View PostJust had the same story from a recruitment consultant.
My Ltd. company owns a small office that it is paying a mortgage on, so I need it to keep earning and have accounts that I can present to the bank when the 5 year review comes up. If I was forced to switch away to an umbrella it just would not work for me, unless I could somehow contrive a way of flowing that income through the ltd. without incurring more taxes on it..?
It is definitely not true that you _have_ to work through an umbrella. In fact working through an umbrella means that IR35 does not apply, since you are just an employee of the umbrella and already paying income tax and NI. IR35 only comes in when a ltd. company is deemed to be actually providing a contractor as an employee, in which case the tax is taken out before your invoice is payed, and the ltd. does not incurr further taxes on this amount.
I think I am going to apply for the job anyway - if they offer it to me I will only take it if I can continue through my ltd. If not, it will be a good practice interview.
Even if you did use your LTD all the income will be taxed as PAYE wont it. There will be no profit to continue paying the mortgage anyway? Or something like that.
Plenty of guides on the nuances but something doesn't sound right there.'CUK forum personality of 2011 - Winner - Yes really!!!!Comment
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Originally posted by northernladuk View PostYou don't have to but the liability is on the agent or client (depending on situation) so it's very unlikely they will allow you to use your LTD. So yes you don't have to in theory, the reality will be that you will have to use an umbrella or Agency PAYE.
Originally posted by northernladuk View PostEven if you did use your LTD all the income will be taxed as PAYE wont it. There will be no profit to continue paying the mortgage anyway? Or something like that.
I am trying to move away from contracting and turn my business into a product company. In that resepect IR35 is very annoying because the business needs to retain profits and invest them in R&D for the products being created. I'm only going to be able to develop my products to a minimal degree anyway with the small budget I can earn through contracting - I'll need to find other investors to get things to the next level.
In that respect IR35 is still problematic; if approaching a bank or VC fund I'd like to be able to present them with a good set of accounts for the last few years. IR35 - just another road block for small businesses to find a way around... We already got the dividend tax to try and level the unfair tax advantages of incorporation, I don't even see why IR35 was needed except perhaps it was lobied for by larger businesses to suppress competition from smaller ones?Comment
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Originally posted by mike67 View PostThere is no reason for an agency to force you to use a specific umbrella as (apart from ones involved in tax avoidance schemes) they are all broadly equal in the way they work out your take home. The main differences are in how professional they are and how easy they are to work with. However, often agencies have commission arrangements with an umbrella company and get a small introduction fee if you use them.
You have no logical reason to trust them, without knowing them and seeing every step of every penny you or your client pays in fees. Your choice to choose from their shortlist of 'approved' umbrella for YOU to be employed by, is not really your choice at all.
And if they are going to make career training expenses more difficult will lead to an increased risk of future unemployment and dependency on continuing very long term with the current client; as you'll be less and less useful to anyone else.Comment
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Originally posted by vlc View PostAn introduction fee large enough to matter and create an incentive against your interests. And do realise that those so called supply chain accreditation bodies should be viewed as just another layer of subtle dressing-up for your deception.
You have no logical reason to trust them, without knowing them and seeing every step of every penny you or your client pays in fees. Your choice to choose from their shortlist of 'approved' umbrella for YOU to be employed by, is not really your choice at all.
Originally posted by vlc View PostAnd if they are going to make career training expenses more difficult will lead to an increased risk of future unemployment and dependency on continuing very long term with the current client; as you'll be less and less useful to anyone else.merely at clientco for the entertainmentComment
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Originally posted by eek View PostYou choice is to take the contract or continue looking or doing something else. Those choices are yours as the end client will just take the next candidate..
What's that got to do with anything - companies rarely pay for any training nowadays and an awful lot can be done online for not very much money...
You are discarding the rights of a worker to choose an employer and working conditions, just on the premise of a legal vacuum and which party happens to be stronger and has the upper hand. That street-gang attitude may be where we are at the moment, but it isn't what we have to accept.Comment
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