Why should I worry about Umbrella Company compliance?

A popular contractor forum has dedicated an entire section to the fears and concerns of individuals who used the following tax avoidance schemes; companies claiming to be umbrella companies but who do not follow umbrella company compliance guidelines. These companies which are currently being or have been investigated by HMRC.

The schemes were labelled as ‘umbrella companies’ but were in fact EBT or loan schemes rather than compliant PAYE umbrella companies:

Edge Resourcing
Sanzar Partnership
Consulting Overseas
Kinsella Solutions
Talent Resource Management
Trafalgar Resource Management Scheme

This is not an exhaustive list; it is thought that around 20,000 contractors have been affected. Although the investigations are current (2013), the contractors who used the schemes did so in the tax years 2008/2009 and their tax liabilities could go back as far as 2004/2005.

Click here to read some of the stories from contractors who are facing additional tax bills, plus penalties, plus interest!

So why is umbrella company compliance so important? If you do nto do your due diligence on companies, you may never know exactly what they are doing, but we can help you follow some basic guidelines on what to look for in a compliant umbrella company, or what marketing ploys to stay away from!

Watch out for dodgy take home pay claims. Be cautious of those companies offering part salary / part non-salary remuneration. Don’t get influenced by statements of increased take home through expense claims.

Remember, HMRC do NOT approve anything, so claims stating HMRC Approved are simply not true!