In the run up to our technology event on the 26th September (you can book your complimentary tickets to the morning and afternoon sessions now) we are hosting blog posts from some of our exhibitors. This one is provided by Freelance Professional Services.
Ten things to check before choosing an umbrella provider
Answer YES if compliant
1. Have they been in the industry for a long time?
Anyone can set up an umbrella company, and with hundreds of operators in the UK, it can be difficult to sort the cowboys from the real players. A key indicator of a company’s standing is their longevity in the industry and a proven track record of managing contractor payroll.
2. Are they regulated by an external body?
Alongside complying with HMRC guidelines, a fundamental sign of a respectable umbrella company is their regulation by a genuine external body. Not being regulated, or claiming to be regulated by a group of other umbrella companies who have made up their own rules about what is a compliant offering, will not protect your business.
3. Do they guarantee protection of your funds in the event of their insolvency?
The majority of umbrella companies will take multiple agency and contractor funds into their own beneficial ownership. The umbrella provider is then able to use your money to repay their creditors in the event of their own insolvency, meaning your contractors go unpaid and you are out of pocket. A quality provider will give you a written guarantee that this cannot happen.
4. Do they comply with AWR using a comparator model?
You need to make sure the umbrella company is using a compliant AWR arrangement. There are a number of companies who use an aggressive Swedish Derogation model to avoid paying their contractors fairly and are likely to be challenged in the future.
5. Do they offer a realistic level of take home pay?
Umbrella Companies offering excessive take home pay, may be allowing unsubstantiated expenses, or may be using offshore tax structuring to avoid paying the right level of tax. Some may not even be an umbrella company – they may be utilising trusts or self-employed services to avoid tax. Utilising these solutions may be a risk for both you and your contractors.
6. Do they pay contractors solely under PAYE, making the correct tax and national insurance deductions?
A compliant solution will ensure that employer’s national insurance is paid in every instance; the contractor is paid at least the national minimum wage; and that the right level of tax and national insurance is deducted. They will be happy to provide you with example payslips to illustrate this.
7. Can they demonstrate their claims for ‘great customer service’?
Most umbrella providers claim to offer a great level of customer service, but what have they actually done to ensure this takes place? A great umbrella administrator will be able to explain, in detail, what steps they take to ensure your workers get the best service possible and how this benefits you as a recruiter.
8. Does their website look legitimate?
A good sign of a reputable company is the content on their website. Is it up to date? Does it provide interesting and relevant information? Do you trust it?
9. Do they have feedback areas?
Nightmare umbrella administrators will avoid social media platforms or feedback areas where their agencies or contractors can criticise their bad service. Check out their online reputation and feedback to find out what their customers think.
10. Can you visit their offices or speak to their staff?
You need to trust an umbrella provider with your agencies money and the money of you contractors, so chatting to the staff and checking out the office is a good place to start the relationship.
