back to article Contractors argue umbrella companies need improved regulation, not outright ban

Contractors have described a UK union's call to ban umbrella companies as unworkable, leading to a greater void in the under-regulated market and making outsourced workers vulnerable. The Trade Union Congress (TUC), a powerful association of British unions, said yesterday UK government should abolish umbrella companies to …

  1. Anonymous Coward
    Anonymous Coward

    Agencies are using Dutch company to reduce Corp Tax

    Recent experience is Recruitment company was using Dutch company to pay Umbrella company that was claiming Gov rebate for new starter.

    End Client was Gov Agency

    So who is diddling the gov / tax?

    1. Anonymous Coward
      Anonymous Coward

      Re: Agencies are using Dutch company to reduce Corp Tax

      That's more or less the main issue.

      The previous system worked, but apparently the plebs were earning too much so it had to be changed.

      As a result, there will now be lots and lots of plays around it, so I'm guessing they've succeeded in giving themselves more to investigate - these people have to hang on to their jobs too, you know.

      Meanwhile, they've motivated more talent to do their own Brexit and bail, so well done.

      Morons.

      1. elsergiovolador Silver badge

        Re: Agencies are using Dutch company to reduce Corp Tax

        The previous system worked, but apparently the plebs were earning too much so it had to be changed.

        Also independent workers offered better quality than poorly paid workers provided by big consulting companies and for better price.

        The rich party donors couldn't have that as well as the Chancellor who has a finger in this pie if I can use that phrase.

  2. Glenn Amspaugh
    Coat

    Difficult To Operate

    Is this because of the brolly trouble that harlequin clown had at a funeral?

  3. elsergiovolador Silver badge

    Avoidance

    Contractors argue umbrella companies need improved regulation, not outright ban

    This is a complete nonsense. You are either a contractor or an employee. Umbrella does not fit in either.

    Umbrella is a mechanism used by corporations to avoid their responsibilities coming from employment law. We had an example earlier how whistleblower was legally let go after exposing some dirt.

    If you are a contractor you don't have to work through an umbrella. What you need is a service called "fee payer", that deducts tax at source and the rest is up to you.

    Umbrellas should be banned first and then the whole IR35. IR35 could be dropped if dividends were taxable as regular income and some sort of a levy added to recoup the employer's NI. Problem is that many rich Tories get paid in dividends, and they would have a heart attack if they had to pay NI.

    1. RegGuy1 Silver badge

      Re: Avoidance

      Well if they'd do the right thing and tax wealth (ie property), where so many have got massive capital gains that isn't taxed, they wouldn't need to have to find niches such as IR35.

      It is simply the old Tories who don't want their home taxed, but do want their homes to pass without fees to their children. 'What's the point of owning your own home,' says my other half, 'if you can't pass it on to your children?' Er: because taxes pay for society for all of us.

      So until you can screw the old to get them to (rightly) pay more, we will live in a country with poor public services and where no one cares about anyone else.

      Alas, Labour are the same, as both parties cannot get into government without pandering to the greedy oldest 20% of the country. Until you change the electoral system, eg with PR, to remove their power, the country will remain fucked.

      And I speak as someone just moving into this group. If you breed selfishness you get shit.

      The only silver lining I see, is that, being so greedy, the over 65s won't even pay for social care. And there many of them are shooting themselves in the foot. Good.

  4. The Vociferous Time Waster

    Two options

    Companies should either hire people directly (fixed term or permie contracts) or use contractors that are proper contractors and treat them as such (not disguised employees/umbrella/inside IR35). If you are a contractor you provide a service and don’t have a manager or go to team meetings or have your hours and location of work dictated to you. Fixed term and perm get the benefits. If companies hire a contractor and then treat them like an employee they should be liable for the tax and benefits of an employee.

    1. Anonymous Coward
      Anonymous Coward

      Re: Two options

      What about the project resources, such as migration engineers or project managers that are only needed for the duration of a client project? These are not specialists (in the sense that only six people in the world can do this thing) and in some ways act like employees (going to meetings, sat at a desk next to permies during normal office hours, follow orders from the manager who's funding the project) for the duration of a six month project. It's a bit much to expect these people to change employer every project, nor should they be forced to work for a real consultancy that dictates which client they work with. Also, in an IR35 free world, they should not need to be a company director which is a world of anxiety that not everyone wants in their life. Compliant umbrella companies have their place.

    2. elsergiovolador Silver badge

      Re: Two options

      I am not sure if you are serious. Your idea of contracting may work for a one man waterfallesque project, but this is not how it works any more in modern world.

      The problem with IR35 is now that companies have to treat genuine contractors like employees, to ensure the relationship falls in scope. This way they can avoid any investigation and fines. This is slowly going to ruin innovation and growth and the end game - every engineer will be an employee working for someone else. Some people under those circumstances stop care and lose passion.

      Funniest thing will be that now the big consultancies will be charging 1000 a day, but their "contractors" will be on lowest salaries they can get away with. This is the crux of the matter.

      Engineers became a commodity and the rich want to skim all the value we make.

      1. Anonymous Coward
        Anonymous Coward

        Re: Two options

        I'm not sure why you're confused. There are any number of reasons why organisations may want to onboard extra resource for a limited duration during a period of transformation, such as a desktop upgrade, data centre migration or business merger. Clearly this is more work than the permanent teams would be expected to handle on top of their day job. And clearly once the transformation is complete, the extra resource is no longer needed as the permanent teams can once again handle the workload. Are you saying that companies should be forced to bring in big-name consultancies at the huge expense you highlight, when previously they could just hire a PM and five engineers for six months to work alongside their existing permanent teams?

        1. elsergiovolador Silver badge

          Re: Two options

          I think you are confused.

          There are any number of reasons why organisations may want to onboard extra resource for a limited duration during a period of transformation, such as a desktop upgrade, data centre migration or business merger.

          Just because something is short lived, it does not mean it won't fall in scope. For example, the company hiring the temporary resource is going to want specifically you to do the job and they will have to approve any substitution, then your gig is inside IR35. It's very easy to make _any_ engagement to fall in scope, and thus avoid potential HMRC investigation and a fine.

          Are you saying that companies should be forced to bring in big-name consultancies at the huge expense you highlight, when previously they could just hire a PM and five engineers for six months to work alongside their existing permanent teams?

          I am not saying they should, but they are already. How long the engagement lasts has very little to do whether contract is in scope or not.

          1. Anonymous Coward
            Anonymous Coward

            Re: Two options

            I'm not talking about IR35 scope. The OP was making a point that there should only be two types of people hire. Permies, or "real" contractors and no IR35. I'm making the case for a legitimate third type of hire who do act like employees for a limited time - perhaps as little as 4 weeks for some desktop rollout projects.

            In the OPs world, these hires would all be fixed term permies, meaning after 10 years of this as a career choice they could end up with 20 pensions, 20 ex-employers to contact for references, 20 P45s on file and a P11D nightmare for all the unused gym memberships, car allowances and health cover.

            Or they could just use a compliant umbrella company and have one actual employer to cover all of these engagements, including one contact for confirming work history and providing financial references, while still remaining in control of their own career.

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