What Are The Risks In Using A Non-Compliant Umbrella Company?

3 July 2024

In this article, we explain how to feel confident that you are choosing a compliant Umbrella.

The main risk in using a non-compliant Umbrella company centres around tax liability.

A good Umbrella company will take care of your income tax and National Insurance (NI) deductions (and any other statutory deductions that may apply to you such as Student Loans) and pay you your net take-home pay.

A compliant Umbrella company will therefore enable you to enjoy the freedom and flexibility of being a contractor whilst saving you the hassle of working out what tax/NI you have to pay, how you have to pay it and by when.

If the Umbrella company operates incompliantly then you may fall foul of the tax rules and face the prospect of having to pay the unpaid tax plus interest to HMRC at a later date. This is a situation being experienced by many hundreds of contractors who used loan schemes, often on the advice of their incompliant Umbrella, and who are now being tracked down by HMRC.

You can avoid this situation by working with a compliant company, like Workwell Umbrella.

Another key risk of using a non-compliant Umbrella is that you may not be given the full benefits you’re entitled to.

Your Umbrella company becomes your legal employer whilst continuing to enable you to enjoy the freedom and flexibility of choosing what work you do and when you do it. This means they have to give you all the statutory benefits of a regular employee such as holiday pay, sick pay, paternity/maternity leave and adoption leave. They will also have to operate a company pension scheme and auto-enrol you, though you can opt-out if you wish. If you do not choose a compliant Umbrella, one or more of these benefits may be compromised.

As one of the UK’s largest and longest-established Umbrella companies, we offer great benefits, including:

 

To find out more about Workwell Umbrella, please get in touch on 01923 257257 and a member of our expert team will be pleased to answer any questions you may have.

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