Yet again, a new umbrella company fraud case has come to light, and it’s extremely disappointing. This time, greedy agencies are engaging with mini umbrella companies to reduce their costs, while putting their candidates at risk of non-compliance with HMRC. It’s never been more important to use a compliant umbrella company for your payroll. To help out, we’ve summarised which umbrella companies are accredited by the FCSA and Professional Passport. We also explain why it’s so important to use a compliant umbrella company for your payroll. Keep reading to find out more.
Mini umbrella companies (MUC) have made the news again
Mini umbrella companies have made the news again. These unscrupulous tax avoidance schemes are helping recruitment agencies reduce their tax liabilities by exploiting the Employment Allowance. We wrote an article on mini umbrella companies a few months ago, and sadly we had to write another one last week. We’ve made it our responsibility to make sure our readers are up to date wit the latest threats to the umbrella company industry so that they can make well-informed decisions regarding their payroll.
If you are not sure which umbrella company you’re using, or you’ve noticed something on your payslip that is unusual, please contact your agency immediately, and seek help from HMRC. While most recruitment agencies in the UK have their candidates’ best interests at heart, some are looking to exploit the UK tax system for their gain, and doing so can put agency workers at risk of non-compliance. Consequently, honest workers could face a huge tax bill in the future, even if they engaged with a tax avoidance scheme by mistake or against their knowledge.
It’s vital you use a compliant umbrella company
The umbrellacompanies.org.uk website is committed to helping contractors, freelancers, and temporary workers make sound decisions regarding their payroll. Throughout the website, we always reiterate how important it is to use a compliant umbrella company or payroll provide and never engage with a tax avoidance scheme.
If you use a tax avoidance scheme – even by mistake, HMRC might come after you for any outstanding tax and National Insurance they deem you to owe. In the past, contractors have been faced with colossal bills because they engaged with a tax avoidance scheme (often years ago).
If you believe you’ve engaged with a tax avoidance scheme or have disguised remuneration, HMRC is urging you to contact them to settle your tax affairs. Please visit the government’s website for more information. We’ve also written an article that may help: How to report a non-compliant umbrella company.
Why should you choose an umbrella company that is FCSA or Professional Passport accredited?
The answer is easy – both the FCSA and Professional Passport are committed to ensuring the supply chain of temporary workers is compliant and ethical. If an umbrella company (or other payroll provider, such as a contractor accountant) is accredited by one of these professional bodies, they’ve successfully proven they operate compliantly, and follow UK tax law.
A recent report by the LITRG found that there are over 500 umbrella companies in the UK. Therefore, we recommend you only consider using those that are FCSA or Professional Passport accredited. Not only does this reduce the number of umbrella’s to choose from, it’ll ensure you pay the correct amount of tax and National Insurance Contributions to HMRC.
Which umbrella companies are accredited by the FCSA and Professional Passport?
The team at umbrellacompanies.org.uk love to be creative, and they’ve produced this very handy table* that shows which umbrella companies are accredited by the FCSA and Professional Passport. We hope you find it useful. There are also plenty of additional resources on the umbrellacompanies.org.uk website about the FCSA and Professional Passport, and we recommend you check them out when you get an opportunity.
Top 10 umbrella companies
If you’re interested in using an umbrella company for your payroll, or you’re not receiving a quality service from your current umbrella, we recommend you check out our top 10 umbrella companies. All of our top 10 are either FCSA or Professional Passport accredited, and some have special offers on at the moment!
* The FCSA and Professional Passport accreditation comparison table above has been created by the umbrellacompanies.org.uk Team in good faith. We’ve collated the information from the official FCSA and Professional Passport member directories, and have done our best to ensure the information is accurate at the date of publishing. We highly recommend before you register with an umbrella company or appoint a contractor accountant, you carry out thorough due diligence, and check they’re definitely accredited by the professional body listed above. If you find an error on the table above, we’d love to hear from you so that we can make the appropriate amendment. Please email email@example.com. Read our websites disclaimer as well, available here.
Table last updated: April 2021