Umbrella companies can be a great route for contractors. They give you the security of continuous employment between assignments and help you build up a significant period of time with one employer rather than chopping and changing between PAYE schemes with various agencies.
However, you need to be careful when choosing an umbrella company, as some companies are non-compliant. These companies are on the rise, and many contractors fall victim to their schemes.
Don’t worry though, we are here to make sure that doesn’t happen to you! We’ll show you how to spot a non-compliant umbrella company, and how to avoid them.
Spotting non-compliant umbrella companies
There are tell-tale signs when it comes to spotting a non-compliant umbrella company. Usually, if something looks too good to be true with an umbrella company, it is. What’s more, you can actually face serious charges if you deal with a non-compliant umbrella company, so being able to spot them is crucial. Here are some signs that an umbrella company is non-compliant:
- Any company that ‘guarantees’ you will take home a fixed % of your gross assignment rate.
- Payments where only a fraction of your salary comes through payroll, and any payments listed as loans or other payments which are not subject to tax or NIC.
- Any payments to your bank account which are not listed on your payslip.
- Your payment does not come directly from the umbrella company and instead is routed through other companies first. Some of these might be offshore.
What steps should you take before registering with an umbrella company?
- Make sure you do thorough due diligence. Run background checks on the umbrella company
- Do a Google search on them, read their online reviews
- Ask for a full and transparent breakdown of all deductions
- Check with your recruitment agency if they’ve heard of them or know them. Recruiters are mostly aware of all good and bad umbrella companies so they should be able to help
- Read your employment contract
- Check the umbrella company’s details on Companies House and look up their financial position, trading history etc.
- Be sure to check the official FCSA website, where you will find a list of all accredited members
Joining Sapphire’s Umbrella
By joining Sapphire, you can rest assured that we are a fully FCSA-accredited company and we will also be here to provide top-of-the-line employee support & benefits.
Get in touch with us today to find out more about Sapphire’s Umbrella company services and how we can ensure you always remain compliant.
