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Choosing an Umbrella Company

Choosing an Umbrella Company

There are many umbrella companies that make claims and promises to entice you to use their service which may sound highly attractive to you at first but as a number of our contractors have unfortunately found out are just a coy marketing scheme leaving them in fact worse off. We listen to our contractors and don’t want you to be mislead in the same way they have been. That is why we have provided you with a comprehensive list of regular complaints detailed below:

Highest net pay claims on the market

There are many Umbrella Companies claiming they can guarantee you receive up to 85% of your income, however if it sounds too good to be true then it usually is!

One way of doing this is by encouraging you to claim for expenses that you haven’t incurred, by putting through false expenses it will significantly increase your risk of investigation and unless you can prove that these expenses were incurred solely for business, then it could see you paying back all of the tax plus a hefty fine! The umbrella company hold no responsibility for putting these expenses through and it will be on your head to prove through receipts your claims.

MSL Forza provides you with the most accurate and up to date information on HMRC’s expenses guidelines. Although we don’t require your receipts because we have been granted Dispensation from HMRC, it is our job to protect you and so we instruct all of our contractors to keep their receipts. We know how hard it can be to keep all of your receipts and have them organised in case of an investigation. When claiming for your expenses on our online portal you can scan and upload your receipts with them and we will keep them indefinitely so if HMRC do investigate we have them all for you.

HMRC Approved / HMRC Accredited

HMRC do not approve or accredit an Umbrella Company! HMRC can grant a dispensation to the Umbrella Company but this does not benefit you at all, it is purely to save the umbrella company from completing a P11 form at the end of year. Read our section on Dispensation for further information.

HMRC can however approve the payroll software that is used by an Umbrella Company, MSL Forza have been given this accreditation for their payroll software and we are proud of this.

Free or cheap starter fees and Umbrella Companies that charge a % of your rate

All umbrella companies have to charge and make profits from their fees, some umbrella companies will advertise their services for free for a period of time however this is usually made up by their hidden charges such as paying for same day payment or putting you on their monthly payroll when they receive payment from their agencies weekly. Other hidden fees come from exit fees, tie in periods, minimum contract or commitment length and penalties for leaving early.

Avoid umbrella companies who will charge you a fixed percentage of your contract rate, in effect if your contract rate increases then so does their fee for doing exactly the same job.

IR35 Compliant

This is irrelevant as IR35 rules are not applicable to contractors working through an umbrella company because you are paid by PAYE and this applies to all umbrella companies. 

Blanket Insurance Cover

When an umbrella company claims that it has blanket cover this more often than not means that it is only for low risk jobs and by no means covers all jobs across all market sectors. This can leave you exposed to huge claims and ‘blanket cover’ would almost certainly not cover; medical, aviation, defence, oil and gas, e-commerce and construction.

Protected from an investigation by HMRC

This claim has no substance, it is the contractor who is liable for tax and HMRC will come after you to reclaim any owed tax.