back to article Court of Appeal ruling offers hope for UK umbrella firm workers chasing holiday pay

A former worker for Pimlico Plumbers has won a case in the Court of Appeal over the right for backdated holiday pay in a case set to help employees of umbrella companies in all sectors, including information technology. Gary Smith won the right to have paid holiday backdated following a ruling from the Civil Division of the …

  1. ShadowSystems Silver badge
    Pint

    Good on you, Mate!

    *Hands you a pint & clinks tankards*

    Here's to nailing the bastards to the wall & beating them like a cheap pinata until they cough up the money they owe you.

    Cheers! =-D

    1. hoola Silver badge

      Re: Good on you, Mate!

      I would have thought the most likely outcome is that where the companies do still exist, they will simply decide to fold rather than pay out back-dated holiday pay.

      Any money that does exist (and I would have thought it unlikely that there will be much) will just disappear.

      1. ShadowSystems Silver badge

        Re: Good on you, Mate!

        The judge could find the CxO's personally, criminally, financially unable to be removed through declaring bankruptcy, liable to pay back all the money owed. Sure the business could go poof, but the C-level execs would still be on the hook. With them thus "stained" it is unlikely any other company will hire said individuals in any administrative role lest the new company get tarred with the same brush.

        Yes the execs could just pack up their stuff & scarper off to somewhere without an extradition policy, but they had better hope their new cave has decent natural resources. =-Jp

        *Hands you a pint*

        Drink up, this world is going to hell in a handcart with greased wheels on a greased slide with a rocket booster wedged up it's arse. =-/

        1. Anonymous Coward
          Anonymous Coward

          Re: The judge could find

          COULD, indeed...

      2. eldakka Silver badge

        Re: Good on you, Mate!

        > I would have thought the most likely outcome is that where the companies do still exist, they will simply decide to fold rather than pay out back-dated holiday pay.

        That would depend on the size of the company (i.e. revenue) vs the size of the payouts.

        If it's a 100million/year company, and the payouts amount to 10million (one-off, not ongoing), is it really worth folding the company over that?

  2. elsergiovolador Silver badge

    Lies

    The reforms are part of the government's crackdown on so-called disguised employment, where workers behave as employees but avoid paying regular income tax and national income contributions by billing for their services through personal service companies (PSCs), which are taxed at lower corporate rates.

    This lie again. There is no such thing as "lower corporate rates". Small business pays taxes as any other business (except big corporations that have means to properly avoid paying tax).

    Small IT companies do nothing different than big consultancies, except thanks to IR35 they are taxed on revenue (when most clients insist on having in-scope contracts) and have become less competitive. That was the whole point - to drive out competition.

    If HMRC really wanted to tackle tax avoidance, they would have looked at those big consultancies that can properly offshore any profits.

    1. Anonymous Coward
      Anonymous Coward

      Re: Lies

      Let us remember that IR35 was brought in by Tony Blair with the precise intention of favouring large consultancies over lone contractors.

      1. Doctor Syntax Silver badge

        Re: Lies

        Probably a few other incentives in play.

        Reputedly the IR has tried this on for years and been rebuffed. Their PAYE system is a system designed by employees on a payroll for employees on a payroll. Payrolls are what they understand.

        Also the Paymaster General of the time, AKA Red Dawn, was from the left of the party. She would be unlikely to look favourably on workers who weren't unionised.

    2. hoola Silver badge

      Re: Lies

      I believe that based on a previous article here, there are many umbrella companies registered in tax havens so there must be some benefit to the operators is doing so that disadvantages HMRC,

    3. Cederic Silver badge

      Re: Lies

      Taxed at lower corporate rates is entirely and completely true.

      Corporate rates are lower than income tax rates, especially if the contractor's gross income goes above £100k/year.

      1. MarkTriumphant

        Re: Lies

        Surely anything actually paid to the contractor from their company is taxed as normal?

      2. Velv
        Boffin

        Re: Lies

        Another fallacy. Companies earn income. People earn income. The two are distinct entities when it comes to tax.

        Companies declare a profit, and pay a tax on that profit. That is part of the company accounts.

        People earn income, you are liable to pay income tax on all the income you make.

        You cannot transfer money from one to the other without there being tax implications, especially from Company to Person, which is income, adds to your total annual income, and is taxed at the same rates as everyone else.

        Dividends are paid out of post tax profits, so have already been taxed at the corporate rate. This is why they appear to get a preferential rate when added to income. But that "relief" is only equivalent to the tax already paid in the company profits. If you receive dividends over your personal tax allowance you are taxed fully on the portion over your allowance, same as all tax allowances.

        Now, if you want to take "pay" out of the company without paying the appropriate income tax, be prepared for a long stay at Her Majesty's pleasure, that is tax evasion.

  3. Kane Silver badge
    Thumb Up

    This whole ruling...

    ...can be summarised in four simple words.

    Fuck You, Pay Me

  4. Anonymous Coward
    Anonymous Coward

    Ho hum

    I just want Parasol to pay me what I'm owed.

    1. Aristotles slow and dimwitted horse Silver badge

      Re: Ho hum

      Sorry to hear this. I left Parasol quite a while ago due to a number of issues, so it seems they have not improved. I then moved to Contractor Umbrella who were properly excellent, but then went Ltd co. after a lengthy sabbatical from the IT industry.

      Hope you get things sorted. The Contractor UK website forums are rife with posts from people having issues with Umbrellas and those Disguised remuneration schemes.

  5. Anonymous Coward
    Anonymous Coward

    OT, umbrella companies

    make Britain great again! :(

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