Contractor umbrella companies operate online so it is imperative that you ask for appropriate documents before you commit yourself to join the company. Your umbrella company will be controlling your finances and therefore will be holding onto your monies once the invoice has been paid so you need to find a trustworthy company.
There are many umbrella companies in the marketplace but not all may be able to provide you with the documents required that will confirm whether they are a bonafide company. It is very easy to say something on a website and not be able to back it up with supporting documents.
Below is a checklist to help you select your umbrella company. It is advisable for you to see these documents before you sign up to the umbrella company. These documents should be easily accessible, so there are no excuses for the umbrella company not to provide them upon request.
- HMRC approved employment contract – the umbrella company will need to be able to issue you with your own contract upon signing up so ask for a copy before you commit.
- HMRC approved expenses dispensation – this clarifies which receiptable and non-receiptable expenses are not required to be filed by the umbrella company on the P11d.
- HMRC approval to operate as an Umbrella Company – can the company prove that the Revenue is allowing them to trade as an Umbrella company.
- Umbrella insurances - You will need to be covered by Professional Indemnity, Public Liability & Employers' Liability insurances protect you against any liability whilst contracting at your client site.
- UK based Umbrella Company – Make sure the umbrella company can provide documents to confirm that they are UK based and not oversees.
- Auditing processes. Who and when checks that the umbrella company is complying with HMRC regulations?
- Holiday & sickness pay – You will need to ensure that holiday and sickness pay is processed when you are not working and therefore is not rolled into your payroll?
- Payroll structure – You need to make sure that you are receiving minimum wage. Make sure the umbrella company does incorporate loans and dividends as part of your payroll.
- Ask to meet with the umbrella company provider at their offices. How can you be sure that the company is not a one man band trading from their home?
See how much better off you would be by using Tarpon, through the free umbrella salary calculator.
To speak to one of our tax experts call 0800 434 6402.
