Umbrella Companies?

[Don]

Some advice from the PH business community, please.

So a few years back I had a somewhat unwanted career change. The Company I was a partner in didn't go bust, it paid all its bills, but it had to stop trading. I went and got a full-time job. Perfectly good job. Well paid etc.

I am not leaving my job. (At the moment).

An old client has been in touch. They need some help with a couple of the systems I wrote them. I want to help them out - and also I will be paid. The old client employs a prime contractor who will be the entity I bill for the work.

But the prime requires a Limited Company to do business with.

So I either form one again with all the overheads and bks OR I go with one of the Umbrella Companies. Now I still have an accountant who could be persuaded to do the work for a Limited, but the Umbrella could be a cheaper option...do I really want my own PAYE scheme and nonsense you have to do as a Ltd.

So. Has anyone had experience with an Umbrella service? I won't be working for my old client much - a few days a year. Stuff I can do in evenings and weekends and by taking the odd day's holiday. So not a great deal of revenue is going to be pushed through whichever channel I choose.

Ideas or recommendations would be much appreciated.

[Eric Mc]

How can a business FORCE an individual to operate through a limited company?

[Mattt]

I've come across this before, it's more a "Computer says no" approach as the Accounts/Admin don't know how to deal with a sole trader. In fact, they'd be better off dealing with a sole trader than a £1 limited.

[Simpo Two]

Mattt said:

In fact, they'd be better off dealing with a sole trader than a £1 limited.

Spot on. The people who make these silly rules know so little about the outside world they don't realise a Limited Company is the perfect place for dodgy geezers to hide. Here today, gone tomorrow.

Anyway, if they insist, add all your incorporation costs onto the bill, and some more for the extra responsibilities you take on as a director, and some more for your time in sorting it all out.

[Eric Mc]

They may also be breaching human rights law as well as a host of employment and other regulations.

[Lawrence5]

Can't see any breach - they can do business with who they want.

Stupid, but seen loads of companies do this hoping it protects then from making a choice about whether they should go through the payroll, accrue benefits etc.

[Don]

Eric Mc said:

They may also be breaching human rights law as well as a host of employment and other regulations.

Yeah. But if I want to do business with 'em I don't have much choice.

Running a Limited costs a fair whack. Take that out of the (tiny) amounts of revenue I expect to get and it makes it a less attractive proposition altogether. I'll be phoning an Umbrella today to see if what I want to do is something they can handle.

[Eric Mc]

Lawrence5 said:

Can't see any breach - they can do business with who they want.

A business can do business with whoever they want to (up to a point - there are legal restrictions in that area too). However, they are not supposed to bully their workforce or place unnecessary burdens on potential employees.

Businesses get away with these things because the legislation is not very well enforced - not because it doesn't exist.

[Dr Jekyll]

I use Trafalgar Solutions as an umbrella and they're fine. The only slight snag is that they charge a weekly fee of roughly 2% of what having your own company would cost a year. Fine if you work some weeks not others, a bit irritating if you do a days work one week and 2 days another.

[sgrimshaw]

If you only expect a tiny amount of revenue, why even bother to play their games.

Offer to do the work, on your terms ... they can take it or leave it.

If you are the only source of the skillset the prime contractor will have no choice but to deal on your terms.

If they won't, then chances are the client will deal direct with you.

Edited by sgrimshaw on Saturday 20th December 16:52

[nyt]

There's usually nothing to be gained from trying to change the mind of a big company. Your chances of being heard by anyone able to actually change the policy is slim.

Use an umbrella company. You may pay a little more tax & NI but you've said that it's a small amount of money anyway.

Once you've proven invaluable you'll be in a more powerful position to negotiate next time.

[Eric Mc]

What are umbrella companies planning on doing about Autoenrolment? Do they just intend to flout the law?

[mph1977]

Mattt said:

I've come across this before, it's more a "Computer says no" approach as the Accounts/Admin don't know how to deal with a sole trader. In fact, they'd be better off dealing with a sole trader than a £1 limited.

except if there is an IR35 issue the company who contracts the sole trader gets arse raped, where if they only trade with companies it;s the ltd company that gets done over by HMRC

also reduces their risk of exposure to a subsequent claim seperate to IR35 issues that the person was in fact an employee of the contracting organisation.

[Eric Mc]

The whole are of employment has now been totally and royally screwed up in some industries to the extent that many individuals can now truthfully ask themselves "Who the hell am I working for"?

And the answer is not the glib "myself" because that is true for EVERY engagement an individual gets involved in for reward.

[MEC]

Eric Mc said:

What are umbrella companies planning on doing about Autoenrolment? Do they just intend to flout the law?

No, they seem to be just enrolling contractors and making deductions out of income, ie paying less over......

[Eric Mc]

I am sure many of these umbrellas are now completely in the wrong regarding their obligations under the Autoenrolment Laws.

We shall see how all this pans out but I see problems ahead.

And also, those who are working through their own limited companies had better check what their status is regarding Autoenrolemnt - pronto.

[MEC]

Eric Mc said:

I am sure many of these umbrellas are now completely in the wrong regarding their obligations under the Autoenrolment Laws.

We shall see how all this pans out but I see problems ahead.

And also, those who are working through their own limited companies had better check what their status is regarding Autoenrolemnt - pronto.

Auto-enrollment is going to be a huge issue for small employers and I've seen some big amounts quoted by IFA's for setting up relatively small schemes; along with this, and also the impending penalties for RTI errors, many small businesses will either not bother employing at all, or will go underground and pay in cash etc.

So much for helping small businesses and cutting red tape.......

[allergictocheese]

Eric Mc said:

They may also be breaching human rights law as well as a host of employment and other regulations.

The state is obliged to abide by human rights legislation, individuals and companies typically aren't.

[Eric Mc]

Are you sure?

Maybe you are being cynical. If you are - I agree, many companies do act as if these laws don't apply to them.

But human rights apply to EVERYBODY - individuals or corporates.

And employment regulations and the laws relating to the the treatment of employees and/or workers most definitely apply to companies. After all, many, many people work for companies so ib would be a bit remiss if these companies could do what they liked.

[allergictocheese]

Not being cynical, simply factual. Read the 1998 act; it applies to public authorities.

What is possibly confusing you is that legislation must be compatible with the Human Rights Act, and companies must abide by legislation. However, that is not to say companies must abide by the Human Rights Act. There is no cause of action against a company based upon a breach of the Human Rights Act, only public authorities.