Mock “Umbrella” Schemes

One strategy adopted by non-compliant providers is the use of a “front” company based in the UK. Offshore (typically Isle of Man) based providers have been known to set up a company in the UK with no obvious connection to the parent company, which operates as an invoicing vehicle channeling payments offshore.

This deceives recruitment agencies who only want to work with compliant UK companies such as those who are members of AUCAE. The way this works in practice is simple: The contractor is attracted to the offshore vehicle by the high relation rates advertised and decides to use their services. The agency who places the worker sensibly will not allow the worker to invoice via an offshore intermediary so the offshore provider notionally enrols the worker with their UK based “umbrella” company.

This company provides the agency with a certificate of incorporation and VAT certificate which even when due diligence is applied does not reveal the link to the offshore provider. Behind the scenes, the contractor joins the offshore provider’s scheme however invoices for work are sent to the agency by the UK company and payment of these invoices is then passed to the offshore provider. The agency is completely in the dark and feel that they are doing the right thing by working with what they believe is a normal UK umbrella.

All Umbrella Companies Are Equal will not allow providers who operate this kind of arrangement to become members and carry out their own background checks on providers to ensure that they are exposed. This approach provides peace of mind to agencies who use the AUCAE Straight Talking scheme to make their PSL selections.

Mike Keeling, One Click Umbrella and AUCAE Member.

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