How do you know if your current Umbrella Company is fully compliant with all laws designed to protect flexible workers, and stamp out tax evasion?
We’re aware of schemes widely available to UK contractors that are non-compliant with either Taxation or Employment laws, or may even be registered as Tax Avoidance Schemes by HMRC.
We’ve listed some situations that savvy contractors should be aware of:
If parts of your pay are put through as expenses, perhaps without the need for receipts or you even incurring them, check with your Umbrella Company if these are being processed correctly. Fruition Outsourcing processes out-of-pocket expenses reimbursed by clients in accordance with HMRC’s rules.
There are a number of scheme operators who paid contractors in the form of a loan, not subject to tax and National Insurance contributions, which would effectively never be paid back. These are schemes are now widely publicised, controversially leaving thousands of contractors owing £millions in unpaid tax and NIC’s.
If you give up any part of your salary for some other benefit, care should be taken to ensure the rules are being operated correctly. If that amount would otherwise be taxable income, then you may be underpaying tax and/or National Insurance Contributions. Fruition Outsourcing only operates HMRC recognised salary sacrifice such as payment into a pension scheme.
UNLAWFUL DEDUCTIONS FROM SALARY
Some Umbrella Companies make certain deductions from pay without valid justification, or hide exactly how your pay is broken down. Fruition Outsourcing provides a detailed pay advice explaining exactly what’s happened, including all employment related considerations such as Employers National Insurance, our company margin, holiday pay, etc. Our knowledgeable team are available to discuss any questions you may have in regards to pay.
PAYE & SELF-EMPLOYED HYBRID ARRANGEMENT
Some Umbrella Companies operate an engagement type which makes a contractor self-employed, but subject to PAYE deductions on their payments. This can sometimes be used to circumnavigate NMW legislation, and is very difficult to understand and potentially costly for contractors. Fruition Outsourcing operate straightforward engagement models that you can choose, based on your circumstances,
OFFSHORE / EMPLOYEE BENEFIT TRUST
Certain scheme providers take money offshore before returning it to the UK without declaring any paying the correct tax and National Insurance, or operate complex schemes designed to artificially replace taxable income with tax free sums. Fruition Outsourcing is fully based in the UK and makes all payments to contractors directly, subject to any relevant deductions.