The Umbrella Companies Blog Archive: June 2009
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Last week I spoke about the reasons companies may disagree over aspects of compliance and the grey areas that still exist within the law. This week I will be looking at what companies are actually trying to comply with.

The MSC legislation introduced in the 2007 budget is one example that should immediately spring to mind and although it was specifically intended for this industry it can obscure other risk factors simply by being so obvious.

That being the case lets get the MSC section out of the way first, the principle way that an umbrella company can fall foul of the MSC legislation is simply not to deduct full PAYE tax and national insurance. Nice and simple, something than any reputable agency should have checked.

From here it gets more mundane, but no less relevant. When working through an umbrella company, you are an employee, if you aren't an employee, it's not an umbrella company, and you should probably be looking for an alternative. You should be treated as any other employee entitled to the same statutory payments and benefits. If an umbrella company were to do anything less, it would be in breach of employment law, indicating that the company in question is not compliant.

Expenses are another area that can get umbrella companies into trouble, any fraudulent claims or failures in their duty of care to HMRC (if they have a dispensation) can make them non-compliant within tax law (and I even have a link for you to HMRC's pdf tax guide). Again this is less exciting than the MSC legislation, but it's no less real an issue.

I'm not trying to scaremonger here, this is more to try to get across the bigger picture. There is no doubt that the MSC legislation is an important thing to bear in mind, but there are other things that you need to be aware of because your agency may not be.

All that said, have a great weekend guys!

Hugo
26/06/2009

Since the MSC Legislation arrived in 2007 compliance has been a hot topic in the umbrella company industry. Before the legislation came in there was a lot of variation between the way different companies operated and the services they offered, but after the legislation was introduced all that had to change.

Umbrella companies became the only game in town, and where there was previously a certain amount of give in how an umbrella company might be run, suddenly they were a defined legal structure, with any variation bringing with it the chance of non-compliance.

It might seem simple to follow a structure that has already been set out, but as with a lot of tax legislation there are huge grey areas that need to be explored. This is the reasons you will see discrepancies in the way different companies operate.

Essentially at this stage it all comes down to who you've taken advice from and their understanding of the business, until HMRC start testing and investigating companies there is some room for interpretation.....

.....except that we're right of course.

Next week I'll go a little more in depth as to what companies are complying with. In the meantime have a great weekend.

Hugo
19/06/2009

Apologies to you all for the lack of recent updates, I've been involved with several non-web oriented pieces of work over the last few weeks, the main one being the Gabem Quality of Service Questionnaire which some of you may have seen and maybe even replied to.

I can understand a certain amount of skepticism about this sort of thing, but questionnaires like this are one of the only ways we can measure your opinion of how we go about things, and hopefully if there are any problems improve anything you're unhappy with. Also it's your opportunity to send in your ideas of new features you'd like to see added.

To remedy the lack of updates, I'm going back to the earlier set up of two blog posts a week, one Wednesday and one Friday, I hope to make one of them an update post (something like this one), and the other something that is more interesting on a general level to anyone who has a hand in the contracting industry. That's the plan anyway.

On a PSA note I've been asked to mention that those of you in London may well be experiencing some conventional mail hiccups on Friday and Saturday due to the industrial action from the Communication Workers Union. This isn't going to affect any payments we make, just the payslips we send out and hopefully just those that normally arrive with you on a Friday.

Thanks very much

Hugo
17/06/2009