How do I know my Umbrella Solution won’t leave me high and dry?
Thankfully it’s rare we need to respond to concerns about financial practices, but with recent reports of illegal practice by some spurious Umbrella Companies, it’s time to clarify the compliance from the scare stories. In this article, we’ll recap the processes, benefits and best beneficiaries of Umbrella Solutions, advise how to address the issues you need to be aware of in choosing an Umbrella Company to manage your pay and tax contributions, and accreditation that’s your backup to knowing your Umbrella Solution provider is 100% compliant, transparent and trustworthy.
What’s an Umbrella Solution?
This is where an Umbrella Company, or PAYE umbrella, acts as an intermediary between you as a contractor, your end client and agency. The Umbrella Company deals with all your salary, payroll, accountancy and taxation administration, making you a PAYE employee across your multiple assignments.
Especially for contractors on multiple short-term assignments, being paid through an Umbrella Company frees you up from the time-stealing admin and potential regulatory pitfalls of tracking, claiming, chasing and completing your pay and tax responsibilities through multiple assignments. Offering the smooth continuity of pay, tax deductions, pension contributions and statutory benefits means rising numbers of contractors are finding Umbrella Solutions the perfect solution for their working practice.
Offering clients, agencies and contractors the benefits of saving money, time and the reassurance of compliance, since their inception around 20 years ago, Umbrella Solutions are becoming the preferred means of payment for many companies.
Why am I hearing bad press about some Umbrella Companies?
Being paid through an Umbrella Company should reduce your risk of tax inaccuracies, avoidance or non-compliance. In addition to giving you the security of seamless PAYE and tax compliance, established, reputable Umbrella Company packages include (as standard)statutory employee rights, , holiday pay, sick pay, maternity, paternity and pension auto-enrolment entitlements, plus some may include additional benefits such as inclusive employee benefits and wellbeing packages.
However, with the increase in popularity of Umbrella solutions, sadly there are unscrupulous companies in the market promoting attractive but non-compliant solutions to the temporary labour market, in reality benefitting only themselves. Since these are achieved by the company failing to pay the correct employer or employee contributions to the government, this leaves the contractor at risk of ending up with a huge bill for unpaid taxes and potential litigation from HMRC. Fortunately, these companies are vastly in the minority, being targeted with in-progress parliamentary legislation, and easily avoided from the vast majority of 100% reputable providers with few simple checks.
How do I trust an Umbrella Company to be legal and trustworthy?
Established, ethical and compliant Umbrella Companies will always provide you with a clear contract of employment, all statutory rights and benefits, and full transparency in how your pay and taxes are calculated. They will never try and steer, persuade or force you into a contract, nor offer anything which sounds “too good to be true”, “in the spirit of the guidelines”, or is unclear on specifics. All of which should be seen as red flags for potential tax avoidance schemes- for which you could be ultimately liable.
But do not worry, this is not the Wild West, and you do not have to be the Lone Ranger! Sheriffs operate across the Umbrella Sector, auditing and accrediting only those companies which operate to the highest standards of compliance. Firstly, the Freelancer & Contractor Services Association (FCSA), the UK’s leading membership body dedicated to ensuring the highest standards for the freelance and temporary labour market. Accreditation is only awarded to providers who consistently demonstrate the highest industry standards: your assurance of professionalism, trustworthiness, transparency and accountability, plus a formal process for complaint and redress should you have any concerns.
Extra-tier assurance comes by ensuring an Umbrella Company uses transparent, live payroll auditing certification, such as that provided by SafeRec Umbrella Certification. With no waiting until year or even quarter-end, every payslip is independently audited at source in real-time, providing contractors, agencies, clients and HMRC with real-time proof from SafeRec that every penny in pay and tax has been accounted, allocated and processed compliantly and ethically.
How do I check a specific Umbrella Company’s valid certification?
Any reputable Umbrella Company should proudly list their certification, such as FCSA accreditation and SafeRec or similar forensic auditing, on their website and documentation, and these claims are very easy to independently verify:
Visit the FCSA website to find Umbrella Companies who have passed the FCSA’s rigorous and stringent Umbrella Company assessments, carried out annually by independent, nationally renowned professional service firms. Using their members’ search facility to confirm membership, what services that company is certified to offer, and what date next certification is due. ICS Accounting are proud to have been FCSA accredited since 2017.
If a company states they are certified by a forensic payroll auditor like SafeRec, search for this confirmation on their independent website. For example, a search for ICS Accounting on https://saferec.co.uk/certified-umbrellas will confirm we are fully certified with SafeRec and in receipt of their four-stage auditing:
- Real-time Umbrella auditing
- Umbrella auditing at source
- Total transparency reporting
- Cross-referencing with HMRC’s Real-Time Information (RTI)
Want to learn more about ICS Umbrella?
Fully FCSA and SafeRec certified, ICS Accounting’s exceptional Umbrella solution provides contractors with all the simplicity, compliance and confidence of seamless payroll and tax administration, including employment rights, holiday and sick pay, and insurance. Not only that, ICS Umbrella Employees also unlock a huge range of members’ benefits, from huge discounts on your shopping, travel and treats, tips and treatments in our Wellbeing Hub, and much more!
For more details and personalised assessment to see if an Umbrella Solution would suit you, visit: www.icsuk.com/umbrella/, call one of our friendly team on 0800 195 3750, or email info@icsuk.com, for no-obligation advice aligned to your individual requirements.
