Growing concern about non-compliant umbrellas – what can you do to make sure you are safe?

Thursday, May 31, 2018

There have been many news articles recently concerning non-compliant umbrella companies. So, we wanted to give you more information on what is happening and reassure you that Maxxima has been taking action so that working through us, you will avoid running the risk of a future tax claim.

We understand that our workers want the freedom to choose the way they are paid so we offer three safe ways to be paid when you work with us: 

  • Take advantage of our free payroll - get paid with confidence that we make the correct deductions on your behalf 
  • Use a compliant umbrella company - we do the work for you and have put in place a rigorous checking process which follows HMRC guidance; we have over 60 fully approved
  • Use a personal service company taxed in line with off payroll regulations 

Some agencies will take a different view on this. We understand they are encouraging workers to be paid through umbrella companies knowing that they are being investigated by HM Revenue & Customs (HMRC), or when they may know an umbrella company has failed a compliance test. 

The consequences can be huge for workers who decide to take their wages through suspected tax-avoidance schemes. It was recently highlighted by Julia Kermode, the chief executive of the Freelancer and Contractor Services Association, in The Times, that “hundreds of thousands of participants will have to pay as much as five-figure sums, with some in danger of losing their homes.” 

Non-compliant umbrella companies may sound very attractive but when they are offering a higher take-home pay (some up to 90%), it can be because they are registered off-shore, making payments in untaxed loans, using expense schemes or using other structures which amount to tax avoidance. HMRC are changing legislation to clamp down further on these activities.

“As the professional body for the recruitment industry the REC upholds the highest standards of recruitment practice. Workers should protect themselves by ensuring that they are only engaged through compliant employment businesses - that operate with transparency - and that agencies only use compliant umbrella organisations in the supply of staff.”

Recruitment & Employment Confederation

For more guidance on moving to a compliant solution or to discuss how we can pay you through our free payroll service, please contact us. Our team are highly trained and knowledgeable and will be happy to talk to you if you would like to confidentially discuss this further. They can even do a quick review of your payslip to check everything is in order.