The Umbrella Companies Blog Archive: August 2008
Home of Umbrella Company Gossip Online

I'll have been with Gabem 7 years on Monday, and whilst it may not be a landmark within Gabem (55% of the company have been here over 5 years, and 19.5% having been here over 7), it's not bad for, as The Times would call us, a small company (we were number 26 in The times best small companies to work for 2007).

During those 7 years we've seen different payroll systems come and go (composite companies became single person companies which became umbrella companies), and through each change we've learned our lessons, taken our knocks, and had better advice (since 2006 our accountants have been one of the global Big Four). This all takes us to where we are now, one of the largest umbrella company providers in the UK and, in our view and those of our advisors, completely compliant. This has taken a lot of hard work but we are proud of the services we provide our customers.

7 years has seen the market explode from perhaps 9 limited company payroll providers to estimates in the region of 130 this year. This year I've even seen one company that for around £17000 will set you up with an almost DIY start your own umbrella company payroll kit.

So aside from this personal retrospective what am I getting at? It's probably a gripe you've heard from me before (but I'm getting old so humour me): The industry needs some regulation, agreed standards that are policed so that way you can feel more confident about your tax situation, and we can relax a bit knowing we are a recognised and accepted industry.

The government is putting expenses under the spotlight again as you may have heard (as you may have seen on the front page). We welcome greater transparency in the market but are irked as the continual focus on Umbrella Companies is in part driven by the abuse of expense dispensations by some of our more unscrupulous competitors whilst simultaneously claiming "approved" status. If you see any companies saying they are "HMRC approved" or "100% HMRC approved", I would encourage you to call HMRC and find out how many companies they have actually approved (you can mouse over the answer here if you don't feel like calling).

Have a great weekend and as always if you want to get in touch you can here.

Hugo
29/08/2008

Well we all enjoyed the Olympics here at Gabem. In fact we have all become rather obsessed with all things Olympian and our eyes are now firmly on London 2012. Regardless of what you think about London hosting the Olympics, one thing is certain; it's a huge project and one that is providing thousands of jobs over the next four years. No bad thing in these economically testing times.

It is estimated that at its peak, the Olympic site will have 9,000 construction workers on site. And the huge stats don't stop there. 7.7m spectators are expected - 20 times the number for the Football World Cup - 15,000 athletes and 20,000 accredited media.

Getting everyone around London is going to be a challenge to say the least. I worked in central London for over 12 years and it was hell at rush hour and given that's the time when many of the main events take place goodness only knows what the Northern Line will be like! Actually, whilst everyone thinks this is a London centric event, something I didn't realise was that 40% of spectator tickets will be for events outside of Greater London.

One thing is certain, the Chinese have given every Olympics to follow a gold standard to live up to. Lets hope we can make London 2012 a peculiarly British event (cynical comments on a postcard please).

Hugo
28/08/2008

In the blog earlier this week I focused on expenses and how ensuring you claim your legitimate expenses can improve your take home pay. Whilst most of our contractors and freelances claim regularly many of you don't if at all. Now this may be because you don't believe you have legitimate expenses (you can always call our customer service team who will be able to confirm what is and isn't allowable). All the information you need should be on this site but there may be further information you think is missing or is not clear so please complete the poll below so we can improve the information or make it more accessible.

Next week we're shut Monday, and open as usual the rest of the week, just make sure you get your timesheets in early. Thanks very much for listening, and I hope you have a great long weekend. If you want to get in touch you can here, we'd love to hear your from you as always.

Hugo
22/08/2008

Just a quick Monday post as I didn't get a chance to post Friday. As some of you may have seen, the front page now has a link to a section on claiming expenses, this is what took up my time on Friday.

It started with a thought I had for this blog, I had assumed that the percentage of people claiming expenses through us was reasonably high and was going to make that Friday's topic. As a result I asked someone in IT run a few comparisons for me as evidence. The result was unexpected, apparently only 33% of people using our service are claiming any expenses. This is an exceptionally low figure given that expenses are the main way a person benefits from using an umbrella company model.

If it's a case that you're not in a position to make a legitimate expense claim (click here to see HMRC's criteria for legitimate expenses), there's nothing we (or any umbrella company for that matter) can do to help, but if it's just a matter of the hassle of putting together genuine expenses and receipts each week or month, you're losing out. Even if you spend just £40 a week, over a 48 week year you are missing out on around £750 that you could otherwise be taking home.

I realise at this point I am probably preaching to the converted, but over the next few weeks we will be attempting to encourage those of you that aren't claiming genuine expenses to do so. In this respect some of you may receive calls unnecessarily, and I hope you can forgive us for that, we're just trying to reach everyone that hasn't claimed recently, ensuring that you take home what you are entitled to.

Thanks for reading, and if any of you need a blank expense form, you can download one here.

Hugo
18/08/2008

Half the week gone again, and those of you that have been working outside this week have our sympathy. Supposedly the weather will be better by the weekend, I have my fingers crossed.

As Lynne mentioned in this blog a few weeks ago our seasonal newsletter "The Bottom Line" is due out in the Autumn and this time we're after your input on what you'd like to see in it. We've received a number of suggestions through the blog, but are always eager for more, so if you have any ideas or preferences you can get in touch here.

In the spirit of finding out more about what you want to see we've put together the poll below, asking what you would like to see more of on the Gabem site itself. We're very interested to see the results.

On Friday we're sending out more information about the pension scheme that we negotiated with Friends Provident on your behalf a while back. It's worth considering, as even if you continue to work part time, we are all living longer, are generally fitter later in life and therefore have more active leisure interests.

One of the advantages of this scheme is that you don't pay tax or NI on your contributions so more money goes into your fund and you pay less tax overall. Somebody asked if Gabem make any money from the scheme, and the answer is no. We set up the pension scheme purely as a benefit for you.

That's all for today, I'll have another post for you tomorrow, covering a bit about expenses. Thanks for listening, if you want to get in touch you can here, we're always happy to hear from you.

Hugo
14/08/2008

Here we have a guest post from Mr Michael Jackson (see what did I tell you) he weighs in from the darkest depths of the customer services team, is currently the office's current Health and Safety Champion, and someone you may have spoken to if you've had the misfortune of having to claim under Gabem's accident insurance (we hope you recovered quickly).

He's here to warn you of the dangers of offshore setups:

Since the inception of the MSC legislation in 2007, temporary & contract workers have found themselves having to shop around for the best offers from companies touting themselves as having the answer to beating or avoiding the new legislation. A simple search in any internet engine will return you page upon page of options ranging from working as a director of your own company to Umbrella offerings.

Most attention grabbing though are listings from companies claiming to be able to offer you a legitimate, compliant service allowing you to take home up to 85-90% of your weekly wage by employing you through a company in somewhere like the Isle of Man. Why settle for PAYE when these companies can legally allow you to take home more? It almost sounds too good to be true..Usually because it is.

Companies offering offshore companies set up in the Isle of Man aren't the answer to the MSC legislation and using them is a big gamble. They work similarly to the old MSC format where you are paid as a minimum wage salaried employee and the remainder of your earnings treated as profit shares and because of the Isle of Man's unique tax setup you only pay around 10% in tax. Which sounds like a great deal right? Wrong.

If you are living in the UK for more than 6 months a year your earnings are still liable for UK Income tax and National Insurance to be paid on your earnings at the end of the year and if you have only paid 10% in tax and a small amount in NI then you can look forward to a bigger bill than a 50 foot duck. And don't forget that the tax man can go back up to 5 years and demand interest on your unpaid tax as well as hitting you with fines for each year you've not declared your earnings correctly. Which all adds up to a huge tax headache for you and zero comeback for the company.

- Michael Jackson

Hopefully we'll be hearing more from Mike in the future.

If you want to get in touch with Mike or myself you can here, thanks for reading and have a great weekend.

Hugo
08/08/2008

So why is there so much variation between umbrella companies? Some will let you submit expenses online when some don't, others will let you join on the phone or charge you for CHAPS payments.

The main differences seem to stem from four factors; the legal advice a company has received, it's operational circumstances, financial decisions and lastly cultural differences.

When legal firms provide advice I'd like to say that all their clients receive identical advice, but speaking from experience we've seen that can differ quite surprisingly between companies depending on how each asked the question. The differences in advice can be something as simple as just recommendations, or extend down to the contractual level. Judging the legal security of an umbrella company is difficult especially as things have become so much more complicated over the last couple of years, I would love to be able to tell you a simple way of figuring it out, but there isn't one.

Expenses are a good example of how these differences can be so significant. Some companies will allow you to claim expenses online, and whilst I can't speak for the advice they've received, ours states that we need original receipts as evidence that an expense has been incurred, making online submission impossible.

Our primary concern is that we don't want you faced with a tax bill or legal issues over expenses that were not allowable, second is that by sticking tightly to the inland revenue guidelines we're legally in the clear (lets face it, claiming for expenses you haven't actually incurred is fraud), it keeps HMRC happy and substantially reduces risk, neither of which is a bad thing.

With regard to operational circumstances, companies may have affiliations that require them to have to do things differently to one another. For instance we are (to my knowledge, and feel free to correct me if I am wrong) the only umbrella company "Authorised and regulated by the Financial Services Authority", and while this is fantastic, it does mean that we have to apply a higher legal standard to the way we operate, otherwise we risk losing that status.

Financial decisions are easier to see than a lot of these differences due to the fact that most of the time they have a figure attached to them. Obviously there are different pricing models and you have to assess what sort of price and service you need, just make sure that you know up front the total you will be paying each week. I would like to add that in my opinion there is no reason to pay companies extra for weekly CHAPS payments there are plenty of companies who won't charge you for it and have you paid on the friday. Any reasonably sized company can usually set up an arrangement with banks for CHAPS payments bringing the usual price down significantly.

Cultural differences are the hardest to nail down of all the things I've mentioned, they reflect the hiring choices, management style and atmosphere in the office of the company in question. This may influence any aspect of the previous 3 either for better or for worse, and the results are very much a matter of what appeals to you as an individual. Hopefully you like friendly, efficient and capable staff at the end of a phone, as that's what we're aiming to provide.

Anyway, I hope this has explained some of the reasons there are such differences between the way umbrella companies work.

Thanks for listening if you would like to comment, get in touch, or correct me you can message me here.

Hugo
06/08/2008

Another week another late post, sorry guys. I have been trying to come up with something a little more interesting for you than the day to day activities of Gabem folk here, but coming up with an acceptable editoral piece of writing is proving to be considerably more time consuming than I expected, thank you for bearing with us in the meantime.

As you will see after I have posted this, Susan has updated her Legal Bits, covering the subject of childcare vouchers, she hopes it keeps you interested and informed, if it does, please get in touch with her as she's insufferable when she's not the centre of attention (at this point I should also add that I consider myself lucky that she has an excellent sense of humour).

We should have a guest poster next week, I'll let him introduce himself on the day, as his parents had a cruel streak when it came to naming him. The lovely Lynne has asked me to remind you about the upcoming Bottom Line, if you have anything you'd be interested in hearing about, you can let her know here.

We're approaching the last week of the recommend a friend offer (and the last week I'll be talking about it I swear), so if you have any friends that are thinking of joining an umbrella company it would probably be worth taking advantage of it, that way you'll both end up with something extra to show for it.

Well that's it until next week, have a great weekend all of you, enjoy the sun while you can.

If you want you can get in touch here, thanks for reading

Hugo
01/08/2008