Should I apply for this job?

[Jerushah]

I am thinking of applying for a job with a reputable umbrella company (http://www.atlantic-umbrella.com/), but following the recent reports (http://www.recruiter.co.uk/recruiters-urged-to-protect-against-umbrella-failures/1004271.article) that several umbrella service providers in the UK owe millions to HMRC and have left their clients’ contractors unpaid; I am wondering whether this is a stable industry to get into?

[SalinaA]

From what I understand, some umbrella companies operate separate contractor funds bank accounts which are separate from the company’s personal bank account. This allows them to reconcile the funds against contractor and HMRC liabilities. In other words, these umbrella firms do not touch contractor funds when they are financing their own operations so this is security in a sense.

So I guess that would be a good question to ask in an interview, whether the umbrella firm you’re applying to operates a separate contractor funds bank account and what thier dispensation is like - get as much info as you can and make sure that they are IR35 compliant and have regular audits etc... This all makes a difference!

What Job are you applying for with them? Is it accountancy/payroll related?

[Jerushah]

Hi Salina, thanks for your reply, you have given me some really useful advice! I am applying for a position in the umbrella company (http://www.atlantic-umbrella.com/)'s payroll department.

Just one more thing: when you say "regular audits", what kind of organisations / bodies would be responsible for these audits?

[SalinaA]

Usually the audits are carried out by HMRC and any professional regulatory body such as a-emc and professional passport, atsco. They are all quite well known in the umbrella industry and if they are carrying out the audits then I would say you should have some reassurance in this regard!

Ask if they run payroll everyday and whether they hold onto c0ntractor funds as this is quite a good indication - a good umbrella company will always pay the contractor as soon as they receive funds thus lessening the chance of any underhand goings on.

[Jerushah]

Great suggestion, thanks :) I didn't realise that some umbrella companies (http://http://www.atlantic-umbrella.com/) were so well regulated.

I've been doing some reading and noticed that the umbrella industry is quite diverse. What's the difference between a normal umbrella company and an employment based PAYE umbrella company?

[SalinaA]

PAYE employment based umbrella company has an over arching employment contract which gives the contractor full employment rights such as:

Maternity Pay
Sick Pay
References
P60's
P45's

All your Pay through a PAYE employment based umbrella company would be subject to the PAYE and NIC's in the same way as a permanent employee.

When going through an umbrella company your rate is also increased by the agency to cover the cost of the employers NI and holiday pay that would usually be paid by the employer so that you don't lose out.

Anyone who does not provide the above may operate disguised as an Umbrella company giving the impression they are all the same.

[Jerushah]

Hi Salina

I see! Does this mean that contractors who go through a reputable PAYE employment based umbrella company (http://www.atlantic-umbrella.com/) are treated as employees rather than self employed?

If this is the case, why are they allowed to claim tax relief on expenses and I cannot? - Sorry for all the questions, it's just that I want it all straight in my head before the interview :)

[helenwh]

Hi Jerushah!
I think you shouldn't apply for a job with any reputable umbrella companies in the UK. Because in the fact that they are owing millions to HMRC and have left their clients’ contractors unpaid. You should apply to another company.