Brolly pitch - Good, Bad, Ugly?

[simes]

A friend going through much of what has been discussed here has been contacted via, I think, an umbrella co.

I have performed a search here and they appear to have popped up once, some time ago, in the category of, 'If it sounds too good to be true...'

Said friend is exploring options and he is one of those who does need cash flow. Perm, PAYE Brolly and leaving altogether are his options. Leaving is unlikely.

Leaving the company name out of it for now, I have pasted the blurb mailed to him below and, as I cannot make head nor tail of it (please resist the temptation to ride that wave), my question is, Is there anyone who can unpick this, make sense of it and determine whether it falls on the side of the angels?

Thank you.

Your Ltd. company will continue to have the pure and sole relationship with your end client or agency, so nothing changes at the front end. The planning will come into effect once funds have been received into your limited company.

As a self-employed consultant you are going to provide consultancy services to the Tax Planning company, they then are free to sell those services onto any number of parties (much like, if you performed services to an agency they could sell them onto someone else - end client). In this instance they will sell your services to your limited company, which will in turn sell them onto your agency. It is important to remember you will be a director of your limited company for solvency and invoicing reasons only and none of your consultancy services will be performed in the PSC (personal service company). The fact that your PSC has to buy in the consultancy services from the Tax Planning co. establishes the reason for an invoice and the flow of money.

Whilst working with the planning you will have the services of their preferred accountancy firm who will be completing the day to day running and all submissions for you. The accountants are a third party company and although the fee is worked into your illustrated figures and offered retention, you will receive an invoice from them for their services on a monthly basis.

Some of the many benefits of working with <BrollyCo> include:

• Your limited company has the sole relationship with your agency/end client
• Complete control of your monies
• Top accountancy services offered - they will be completing the day to day running, submissions and self-assessments for your company
• Personal account manager
• Pay when paid - you pay <BrollyCo> then you will receive funds the next working day into your personal account
• Simple timesheet and payment process
• Compliant and simple offering

With the HMRC reducing a Directors Annual tax free allowance on dividends from £30k per annum to £2k many contractors are looking for a more tax efficient way to draw their income.

• Tax-free dividends - Up to £2,000

• Basic rate (7.5% + 19% corporation tax) - Up to £43,000

• Higher rate (32.5%+ 19% corporation tax) - Up to £150,000

• Additional rate (38.1%+ 19% corporation tax) - Above £150,000

If you are contracting on a day rate above £350pd then over half of your income will be taxed at 51.5% using the dividend tax structure.

[eek]

A friend going through much of what has been discussed here has been contacted via, I think, an umbrella co.

I have performed a search here and they appear to have popped up once, some time ago, in the category of, 'If it sounds too good to be true...'

Said friend is exploring options and he is one of those who does need cash flow. Perm, PAYE Brolly and leaving altogether are his options. Leaving is unlikely.

Leaving the company name out of it for now, I have pasted the blurb mailed to him below and, as I cannot make head nor tail of it (please resist the temptation to ride that wave), my question is, Is there anyone who can unpick this, make sense of it and determine whether it falls on the side of the angels?

Thank you.

It's a tax avoidance scheme pretending to be an umbrella - keep as far away as humanly possible and if your friend is thinking about using them direct him to the HMRC Scheme Enquiries forum.

[simes]

Yup. Thanks eek.

Those very words and advice were imparted last night but, in a belt and braces approach, I figured I'd pop it up here.

ContractingWISE, are the purveyors.

[eatenrifles]

Perm, PAYE Brolly and leaving altogether are his options. Leaving is unlikely.

Assuming from this he's inside or working for an end client that has blanket banned PSC's all his income will be paid net of tax, regardless of where it's paid, so how is a contrived brolly scheme going to benefit him even if you set aside the obvious wouldn't-touch-it-not-even-with-yours-mate aspect of the arrangement?

[simes]

Quite right in your assumption.

Subsequently, this was the first question I had for him. I couldn't understand the dynamic, hence why I asked him to email me the blurb.

Was this an introduction via the current agency? Was this a cold call/email for a future outside of the current client? I assumed the latter because, if current client is not dealing with PSCs, then as you say it is irrelevant to the current situation. That said, it required a read...

And upon reading it, I was still none the wiser.

[lucyclarityumbrella]

Was this an introduction via the current agency? Was this a cold call/email for a future outside of the current client? I assumed the latter because, if current client is not dealing with PSCs, then as you say it is irrelevant to the current situation.

The agency would probably run a mile too or they risk prosecution under POTAS! Can't see how this would even be positioned. So you tell the agency you are working via a consultancy which then passes to the Ltd company, then somehow they feed some of that through a brolly, which isn't a brolly! The mind boggles and that's before any IR35 conversation!