Do Umbrella Companies get a raw deal?

[JeffreyC]

Originally Posted by JeffreyC

Hugo, I believe that I (and probably lurch) have the benefit of a degree of anonymity - we can say it like we see it unlike a company representative.

Oh, and in case you were wondering - Jeffrey isn't my real name

[hugo@gabem]

Originally Posted by JeffreyC

Oh, and in case you were wondering - Jeffrey isn't my real name

This is the internet nobody uses their real name (and I can't say I blame you), I am quite amused that you could even work here.

Okay speaking from a personal standpoint then: I have been through quite a few positions in this company before I ended up as the "web chimp", and I can't deny I have had my own share of blow ups over people on the phone during that time, who in the service industry hasn't? You just have to get to the end of the phonecall as politely and positively as possible and then go for a break and try to get over it.

I do appreciate that there are a lot of factors to all of this, I don't know the procedures at your company, or the agency the contractor was working through, but I believe that there is usually a positive outcome that can be reached even in these sorts of situation.

One thing I will say (and this isn't company policy, merely a personal strategy) is that trying to tell someone that something is their fault puts them on the defensive, your best chance at getting a good result is to ignore that as much as possible and try to placate them regardless of the circumstances. Even if you can't get them what they want they are usually happy with the effort you've put in.

[Rob Crossland]

Don't think we get a raw deal - we are in the service game and that comes with challenges, especially when it relates to a persons livelihood.

There are some residual issues that continue to blight our "industry" and force legislators it seems to crack down. A quick google on any day of the week will show the volume of "solutions" that still are openly advertised as ways around tax.

Focus on service, a competitive offering and employee benefits is the future - being overly creative with tax will still appeal to some but does not help Contractors and true employment based Umbrella's.

[CrazyMoose]

Originally Posted by Rob Crossland

Don't think we get a raw deal - we are in the service game and that comes with challenges, especially when it relates to a persons livelihood.

There are some residual issues that continue to blight our "industry" and force legislators it seems to crack down. A quick google on any day of the week will show the volume of "solutions" that still are openly advertised as ways around tax.

Focus on service, a competitive offering and employee benefits is the future - being overly creative with tax will still appeal to some but does not help Contractors and true employment based Umbrella's.

This is a real problem. I work with several contractors that claim to work through an 'umbrella company' but when you dig a little deeper, the structure is more like a single person company (director’s loans, divs etc). In my opinion, post MSC legislation, more and more payroll providers use the 'umbrella' term as a way of demonstrating their apparent compliance to agencies. Nowadays, if Mr. Recruiter hears anything other than Umbrella, he immediately refers the contractor to either the in-house compliance team (if they have one) or a company on the PSL.

[Rob Crossland]

Originally Posted by CrazyMoose

This is a real problem. I work with several contractors that claim to work through an 'umbrella company' but when you dig a little deeper, the structure is more like a single person company (director’s loans, divs etc). In my opinion, post MSC legislation, more and more payroll providers use the 'umbrella' term as a way of demonstrating their apparent compliance to agencies. Nowadays, if Mr. Recruiter hears anything other than Umbrella, he immediately refers the contractor to either the in-house compliance team (if they have one) or a company on the PSL.

Agreed - it's a real problem and there are UK fronts to some that then move some of the income offshore for tax treatment. Hard for all concerned other than the scheme owners.

[The SMG]

Originally Posted by Rob Crossland

Agreed - it's a real problem and there are UK fronts to some that then move some of the income offshore for tax treatment. Hard for all concerned other than the scheme owners.

Double agreed. People that work in the industry have told me that it's anti-competitive to be compliant and I can certainly see how this is true. If a contractor phones up Umbrella A and asks for an indicative take home based on the number of hours worked, he / she will probably be looking in the region of 60 - 65%. If five minutes later they then phone Umbrella B (which is not actually an umbrella and frankly therefore, not compliant) they may well be told that their take home will be in the region of 80 - 85% .

Decision time...
Umbrella A - 60 - 65% Take Home
'Umbrella' B - 80 - 85% Take Home

Now let me think which one they'll choose...

G

[lurch]

Originally Posted by The SMG

Double agreed. People that work in the industry have told me that it's anti-competitive to be compliant and I can certainly see how this is true. If a contractor phones up Umbrella A and asks for an indicative take home based on the number of hours worked, he / she will probably be looking in the region of 60 - 65%. If five minutes later they then phone Umbrella B (which is not actually an umbrella and frankly therefore, not compliant) they may well be told that their take home will be in the region of 80 - 85% .

Decision time...
Umbrella A - 60 - 65% Take Home
'Umbrella' B - 80 - 85% Take Home

Now let me think which one they'll choose...

G

Yes compliance is not sexy, and until HMRC take some action against non-compliant companies that sort of thing is going to continue.

It's not a bad rule of thumb you have there though, 60 - 65% is probably a safer bet, whereas 80 - 85% should be ringing alarm bells.

[O.S.C.R.U.F.T.]

Originally Posted by lurch

Yes compliance is not sexy, and until HMRC take some action against non-compliant companies that sort of thing is going to continue.

It's not a bad rule of thumb you have there though, 60 - 65% is probably a safer bet, whereas 80 - 85% should be ringing alarm bells.

I thought The Inland Revenue were looking at Umbrella companies at the last Budget, or maybe I’m wrong. Either way, I agree that it is very difficult for the companies out there that are trying to do the right thing to compete in a largely unregulated market. You can only hope that the vast majority of contractors are sensible enough to look beyond take home pay and focus more on what's legal and what's not.

[Rob Crossland]

Originally Posted by O.S.C.R.U.F.T.

I thought The Inland Revenue were looking at Umbrella companies at the last Budget, or maybe I’m wrong. Either way, I agree that it is very difficult for the companies out there that are trying to do the right thing to compete in a largely unregulated market. You can only hope that the vast majority of contractors are sensible enough to look beyond take home pay and focus more on what's legal and what's not.

In that very statement we have some of the issue... "Umbrella Company" does not adequately define what we do and what others do so we all get tarred.

At last budget the emphasis was on travel and subsistence expenses as they are claimed by Contractors working through Umbrella's. HMRC have introduced scale rate payments in an attempt to create a level playing field for all employers.

[CrazyMoose]

Originally Posted by Rob Crossland

In that very statement we have some of the issue... "Umbrella Company" does not adequately define what we do and what others do so we all get tarred.

At last budget the emphasis was on travel and subsistence expenses as they are claimed by Contractors working through Umbrella's. HMRC have introduced scale rate payments in an attempt to create a level playing field for all employers.

They should probably go one step further and sort out a generic, industry-wide dispensation for ALL umbrellas / employment management companies. That way, the only difference from one company to the next will be the standards of customer service and weekly / monthly admin fee.