1. They Tell You You’re Going To Be Paid As Self Employed – It almost defies belief that anybody would fall for this but on the end of a slick sales call and with promises of an 84% return then who knows! It’s a scam and not a very clever one at that. It involves your “Umbrella” telling your agency and/or end client that you are being employed (in order to be IR35 compliant) whilst at the same time paying you the contractor as a self-employed person. Money changes hands without deductions (except a generous “fee”) and you are left to settle your own tax affairs. The number one purpose of an Umbrella Company is to provide employment, if they are not employing you then the IR35 implications for not only you but the agency and end client are enormous.
2. Mystery Loans On Your Payslip – A much cleverer scam but still a scam all the same. Your Umbrella Company is going to process payroll correctly, you are an employee, but there are loans/advances appearing on your payslip without explanation, that never need to be paid back and that for some reason do not attract an income tax or NI obligation. If they are ever paid back it will be by your employer not you, so they are not really real. There will likely be a very clever sales pitch as to why this is all OK, after all you are only getting 1 pay slip so it must be right? Surely. Except it’s not, your Umbrella Company is your employer, if an Employer was allowed to just add non-specific Gross amounts to your payslip do you not think every employer in the UK would be doing it? Why would they burden themselves with higher employer NI payments and their staff with larger tax bills if they could just pay out a large chunk of money as a “loan/advance”? They don’t because it doesn’t work. It won’t work for you either.
3. Can I Run This Past My Accountant? NO – The majority of new Umbrella Company contractors are coming from a background of having a Limited Company and every likelihood of having use of an accountant. Please take advantage and use them! Any Umbrella Company that can’t or isn’t willing to explain to your accountant how their service works needs to be treated with extreme caution. That small accountant’s fee could save you a fortune in not only money but also stress further down the line.
Quad Management offer a hugely competitive PAYE only employment option for UK contractors and freelancers. Our £15 a week margin is all it costs for you to have full peace of mind, IR35 compliance and right now we are offering a 1 month FREE trial to all new contractors who sign up.