Issues with 'Tax Efficient' PAYE Umbrellas

[mjcp]

[snip] ... entered into a legal loan arrangement [/snip]

Idle thinking*... is there any angle** to do with the promotors etc needing to be licensed lenders, licensed credit brokers etc? (another red flag to add to the list: If an "umbrella" has a credit broker's license, avoid them...)


* I've managed to avoid umbrella roles thus far, so no direct exposure

**to defend a liquidator's claim / shift liability etc etc.



M

[Pturner]

Thanks I'll give Amaze a whirl when on my break in a bit. Thanks for the help on this its appreciated.

[eek]

Idle thinking*... is there any angle** to do with the promotors etc needing to be licensed lenders, licensed credit brokers etc? (another red flag to add to the list: If an "umbrella" has a credit broker's license, avoid them...)


* I've managed to avoid umbrella roles thus far, so no direct exposure

**to defend a liquidator's claim / shift liability etc etc.



M

Nope, these loans are not to consumers so none of the legal things you are looking for need to exist...

[mjcp]

Nope, these loans are not to consumers so none of the legal things you are looking for need to exist...

Whom are they to then? Not the Ltd Co / PSC. Not a partnership... so to an individual, no?
M

[eek]

Whom are they to then? Not the Ltd Co / PSC. Not a partnership... so to an individual, no?
M

The loan would probably be between an employer and an employee and that type of deal isn't subject to any form of credit license requirement - it's simply your employer doing you a "favour" to solve your cash flow issue...

I say this as the loan probably won't be a loan and it may not even (depending on the scheme) come from the same company as the bit you paid tax on - but either way there won't be a consumer credit agreement associated with the scheme as there is no consumer involved.

In fact the only way to know that there isn't a problem is to:-

1) check that the employee NI and income tax paid on your payslip looks right - so check with a payroll calculator to see what is should be and if it's within 5% of those figures things should be fine.
2) that the same figures appear on your HMRC tax account when its updated.

But in all these examples the only time you know the umbrella is legit will be after you've been paid and you've checked the payslip.

[eek]

Copying this here so that we never lose it

If a liquidator found out that agencies had repeatedly referred contractors to this sort of avoidance scheme, he/she could sue the agencies for the tax losses on the basis that, to generate a higher than normal commission, they'd knowingly turned a blind eye to the tax avoidance taking place

And it's easier to pursue one agency than a hundred contractors ………...

As this answers the question of what do you say to an agent as he recommends a tax avoidance "umbrella"...

[Pturner]

An update on Amaze after yesterdays suggestion. I contacted them and went through the Q and A process and all seemed fine but last night had a little look into them using http://opencorporates.com/ which i used for Pace Pay to find Malta. It showed there is an Amaze umbrella in England, Malta and Isle of Man. Is this just a weird coincidence or are they all connected and using foreign set ups? How can they be fcsa if they are? I am going to call fcsa today to ask about them as it doesn't seem right and I'll post what they say.

[webberg]

I'll add a few thoughts.

First, companies having the same name but being founded in different jurisdictions is not unusual. You therefore need to go a little deeper to see if the connections run into directors, shareholders, holding company, etc.

Second, a quick scan of the three "Amaze" entities (UK, IOM, Malta) says to me that the IOM/Malta entities are connected and that the common party there is AML/Knox House Trustees/certain directors. There is no obvious link between the UK entity and the others, but as I said, it was a quick scan.

Third, the surest indication that an umbrella may be something less than "fully compliant" with UK tax rules is to compare gross invoices with net pay.

Compliant umbrellas operating PAYE on all income will ALL be returning about the same ratio of net to gross, i.e. around 65%.

There may be minor variations because of expenses but the restrictions there these days will mean that the difference will be small.

The ONLY difference between compliant umbrellas will be their fee.

Any umbrella offering more than around 70% of gross invoices to you as net pay needs to be approached with caution. If this is the case ask the following question.

"How much of the difference between gross and net is tax actually PAID to HMRC?"

If the answer is less than say 25% of the gross, walk away.

(Bear in mind that it was common to find that "umbrellas" would pay say 75%/80% of gross invoices but that the difference was almost always taken in fees and the amount paid to HMRC was often 1%/2%.)

I'm not for a moment suggesting that the UK version of Amaze is doing this, but any compliant umbrella would be willing to share a breakdown of how the gross invoice value is divided between you, them and HMRC.

[piebaps]

Amaze Umbrella PCC Limited is an Isle of Man company incorporated on 21.03.2018 and has a registered office at Knox House, 16-18 Finch Road, Douglas. This address is associated with schemes operated by Doug Barrowman. Director is a Lisa Nicola Rowe. A google search on her shows possible results in Malta (but I'm not paying for them!!).

The UK company was incorporated in November 2017 and has only one director Nathaniel Giddings. It's website has me dubious for starters. There's no "about us" listing the staff and their working backgrounds - which immediately steers me away! There is however no obvious connection to the IOM company.

Malta - Not much I'm afraid. I did find a tweet https://twitter.com/SavedEmails/with_replies and the mention of LCAG was enough.

Taking all the above into account, I won't be reaching for my bargepole - because I wouldn't touch them with it! If the UK company is untainted by the others it should be simple for it to undertake some PR work to rectify this image problem.

Damn webberg, you're quick

[cojak]

This https://www.contractoruk.com/forums/...ngement-2.html shows up as my second result when searching for Dark Blue..

So that leaves Amaze who are FCSA registered (so should be legit as my FCSA dislikes have little to do with tax avoidance more the fact they are f***ing clueless about what they need to do to clean up this mess of an industry).

Could FSCA be sued if any registered company proves to be not legit but sharks in disguise?

#justasking