For your payroll, you must only work with compliant umbrella companies to avoid underpaying taxes and owing HMRC thousands of pounds. Verifying if the umbrella company you wish to work with is SafeRec Certified, FCSA Accredited, or Professional Passport Accredited is one way to make sure they are operating in full compliance with UK tax law and HMRC legislation.
SafeRec
Leading compliance and technology business SafeRec, powered by AI, examines umbrella companies in real-time, at source, to make sure there are no indications of malpractice. To ensure that payrolls have been processed ethically and compliantly and that taxes have been correctly deducted and paid to HMRC, every payslip produced by an umbrella company certified by SafeRec is audited. All payments are also cross-referenced with payments and with RTIs supplied to HMRC.
Every time a contractor is paid, they receive a payslip report, which gives you the opportunity to verify that the umbrella company processed your pay legally and in accordance with HMRC’s guidelines. SafeRec will notify all supply chain participants and indicate any instances of malpractice in the report.
Please go to the SafeRec website’s certified umbrella company list to find out if an umbrella firm is SafeRec Certified.
FCSA
The Freelancer & Contractor Services Association (FCSA) is a UK membership association whose mission is to make sure that all companies in the supply chain who deal with contractors, freelancers, and temporary workers adhere to HMRC laws and regulations and that they do it in an ethical manner. Businesses who want to become accredited by the FCSA must pass a rigorous evaluation and audit to demonstrate that they are compliant. Every bit of data collected is shared with HMRC.
Please visit the FCSA website to view the list of accredited members in order to determine whether a contractor accountant or umbrella firm is FCSA approved.
Professional Passport
An independent organisation with a long history, Professional Passport is dedicated to making sure its members follow stringent compliance guidelines. Since its founding in 2007, Professional Passport has grown to include over 70 members who provide a range of payroll services to agency workers, freelancers, and contractors in the UK. These consist of contractor accountants, CIS payroll providers, and conventional umbrella corporations (PAYE).
Please go to the Professional Passport website’s list of accredited members to find out if an umbrella firm or contractor accountant is accredited.
Additional signs to check an umbrella company is compliant
While searching for certification is a fantastic place to start, there are other signs to look out for to see if an umbrella company is compliant.
PAYE
HMRC’s tax method is called Pay As You Earn (PAYE), and all compliant umbrella companies must use it. After deducting the proper tax amounts from the workers’ money that it has received from the agency or end-client, the umbrella provides the worker their net income.
Do they offer a precise take-home example?
PAYE is used by all compliant umbrella companies, as was indicated in the previous statement. As such, you should anticipate keeping between fifty and seventy-five percent of your income. Alarms should go off if you receive an umbrella company calculation from a provider who is claiming you can take home much more. Even though it could be tempting to pick the umbrella that gives you the biggest pay retention, consider how they arrived at the amount they’re proposing. Save for the margin, nothing should change regarding your pay retention while switching between compliant umbrella companies.
Are they highly regarded online by other contractors?
Examining an umbrella company’s evaluations on Google or Trustpilot is a great method to find out if other contractors think highly of them and suggest using them. You can be quite certain that you will obtain decent service if they have great feedback and ratings online.
Do they offer the legal benefits and employee rights that they claim to be able to provide?
Compliant umbrella companies will provide you with employee rights (statutory). The umbrella will be your employer, and you’ll be their employee. However, if you engage with a non-compliant umbrella company, there is every chance they can’t offer you the same employee rights – even if they say they can. Therefore, this could leave you vulnerable.
There is fierce competition among hundreds of companies in the burgeoning umbrella company industry. Make sure the “little extras” that umbrellas are offering you are genuine and appropriate before accepting them. Compliant umbrella companies may provide you with legitimate extras like account management, same-day faster payments, and free insurance. On the other hand, you should stay away from any company that claims to be able to lower your tax and national insurance payments.
Verify that the umbrella company is not listed among the tax evasion schemes that HMRC has identified
Freelancers and contractors should steer clear of the tax avoidance schemes listed by HMRC. These are only a few of the numerous tax evasion techniques that target freelancers and contractors in the UK; the list is regularly updated by HMRC. Visit the government’s current list of named tax evasion schemes, promoters, facilitators, and suppliers page to get the most recent list. Participating in a tax evasion strategy may result in significant consequences for you. HMRC may issue you with a sizable tax and National Insurance charge for the unpaid amounts that they determine you owe. You can also be subject to further fines or penalties.
View our top 10 umbrella companies to choose a reputable provider
Starting your search with our list of the top 10 umbrella companies is a great way to ensure you are starting your search with compliant providers. Every umbrella company in our top ten is accredited by the FCSA or Professional Passport.
