Umbrella service compliance - How do we compare?

Is worrying about compliance really such a big deal?

We think so. There are a high number of compliant umbrella companies, but there must also be a high number of non-compliant ones for HMRC to take such public notice of the industry. Undoubtedly compliance is vital to keep you working safely. Unfortunately it is a much overused term and, in our view, some of the most non-compliant umbrella companies are the ones that shout about compliance the loudest.

So what is compliance?

Compliance is adhering to tax rules and legislation.

What are the rules?

There are a few to consider, but the main one is that you can only claim for expenses you incur. It is important to understand that the rules are exactly the same for all umbrella companies.

Why would a company want to break the rules and what has compliance got to do with value?

They may charge very high fees and encourage you to claim lots of expenses that you have not incurred. This ensures your take home pay looks reasonable and you may then fail to notice the very high fees you are paying.

How can I tell who is compliant and what are the fees I am paying?

You would think that by simply asking providers and reviewing the financial illustrations they provide you could tell; however, sometimes this couldn’t be further from the truth. Some umbrella companies assume additional expenses in illustrations that you have not asked them to. Without getting into the detail of the numbers you will be unable to arrive at the true fee.

You may try insisting that your provider confirms to you in writing "The total gross cash amount I am paying you each week. Do not allow for any tax savings. Please include all gross costs for any extras I might incur."

There is no point undertaking tax planning with an umbrella company only to have the financial benefit taken away from you because of the high fees you are being charged.

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