Greedy contractors could be fueling tax avoidance schemes

Greedy contractors could be fueling tax avoidance schemes

We’re grateful to have some friends within the umbrella company marketplace who are well-positioned to share valuable experiences with our readers. We’re surprised to hear the number of contractors who complain to umbrella companies about their take-home pay and how other umbrella companies are quoting them more. Some temporary workers deliberately seek inflated take-home pay because they appear to have a sense of entitlement. We’re going to summarise how greedy contractors could be fueling tax avoidance schemes below. However, before we continue, we want to make one thing clear. We understand that most contractors, freelancers and temporary workers are wonderful, ethical individuals who do not advocate tax avoidance schemes. Unfortunately, there are a few who do, and it’s unacceptable.

Some umbrella companies receive undeserved abuse

Having caught up with some sales professionals working for some of the major umbrella companies in the UK, we were astonished to discover that some temporary workers think they’re above the law. On a daily basis, umbrella sales professionals are having to defend PAYE as a tax system, and reassure contractors that it’s compliant and the most reliable way for temporary workers to get paid (assuming they’re inside IR35). Apparently, plenty of contractors give umbrella companies an earful about how they deserve more money and that they’re going to find an umbrella that treats them better and offer higher pay retention.

We must remind our readers that compliant umbrella companies process Pay As You Earn (PAYE) – HMRC’s tax system. This means that umbrella employees receive their net salary after deductions have been made to their gross salary. Deductions are sent to HMRC directly, except the umbrella’s margin.

Umbrella companies offer a compliant payroll service. 99% of temporary workers make a decision, and if they decide to use an umbrella, they do so on the back of their research. If you don’t want to use one – that’s fine, but please remain compliant with your tax affairs.

Where there’s demand for inflated pay retention, there will be tax avoidance schemes

Okay, so most recently, mini umbrella companies have targeted agencies and have offered them ways to save money by referring candidates to a tax avoidance scheme (mini umbrella company). However, traditionally, things have been different, and temporary workers have been targeted directly.

Unfortunately, greedy contractors are fueling tax avoidance schemes. Sadly, some innocent and good-intentioned workers are coerced into using tax avoidance schemes against their will – or entirely by mistake. On the other hand, there are also plenty of people who use them deliberately to lining their own pockets. These people are sticking their middle finger up at most UK tax-payers, and they’re a real problem.

If you know anyone engaging with a tax avoidance scheme, we urge you to ask them to see sense. They should contact HMRC immediately and settle their tax affairs. As soon as the entire temporary workforce acknowledge tax avoidance is wrong, the quicker tax avoidance schemes will disappear. However, as history shows, a small minority always prioritise themselves and couldn’t care about the greater society.

Here’s our advice to contractors looking to retain more money


  • Base your decisions on what the reliable experts are saying. We’re trying to help, but we don’t claim to be experts. Conduct thorough due diligence and read up on compliant payroll services – but only visit reliable sources (the government’s website, the FCSA, Professional Passport, APSCo, LITRG, etc.).
  • Seek a role outside IR35, as it will boost your chances of retaining more of your pay (through a personal service company).
  • Ask for a higher rate if it’s appropriate to do so. If you’re new to umbrella’s, you will discover that many agencies offer uplifts to candidates who require an umbrella company for an assignment. This is due to the deductions that’ll occur. After all, by outsourcing payroll, agencies are saving themselves plenty of money.
  • Find an umbrella with a low margin. The margin is the only thing that should alter your take-home pay between compliant umbrella companies.
  • Use an FCSA or Professional Passport accredited umbrella company because they’ll ensure you retain as much as you’re legally entitled to.


  • Engage with a tax avoidance scheme. Using a tax avoidance scheme might boost your pay retention now, but HMRC are stepping up their efforts to reclaim unpaid tax and National Insurance Contributions. You could be retrospectively punished (look up the Loan Charge). For example, use a tax avoidance scheme for 12 months now, and HMRC could hold you accountable in a decade.
  • Look for loopholes to earn yourself a few more £.
  • Believe all of the gossip published by third-parties with a vendetta against umbrella companies. It’s our opinion that HMRC loves umbrella companies because they ensure workers’ pay the correct tax in the eyes of the law. We’ve seen plenty of organisations (often backed by accountants who have undoubtedly lost business due to off-payroll changes) spread hatred on umbrella companies and use scaremongering tactics to boost their following (and inflate their egos).
  • Have a go at people working for compliant umbrella companies. If you don’t want to use one – fair enough. But they exist to offer a payroll service, and HMRC acknowledges them.

Top 10 umbrella companies

If you’re looking for a PAYE umbrella company that will pay you compliantly and following HMRC’s rules and regulations – you’ve come to the right place. We’ve collated a list of top 10 umbrella companies. They’re all either accredited by the FCSA or Professional Passport, so you can be sure you’re in the safest hands! And some of them have special offers at the moment! You’re welcome!

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Click here to see our top 10 umbrella companies!

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