What makes a compliant umbrella company?

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As a contractor, it is vital to conduct thorough research when deciding between umbrella companies. While it’s important to look at what benefits they could offer you, it is also crucial to choose a compliant company.

So what should you look for in a compliant umbrella company?

Awareness and understanding of legislation

A compliant umbrella company should be expected to pay close attention to new and upcoming legislative changes. When any amendments are passed, the business should follow the new rules, consider how they could impact contractors and adjust its procedures accordingly. In addition, it is essential an organisation knows its IR35 from its AWR.

Legitimate assignments

Umbrella companies should only be working with contractors who are on genuine contracts. Interims should have clear hours of work, (not zero hour contracts) be entitled to holiday pay, sick pay, maternity/paternity pay, HR support and encouraged only to claim legitimate business expenses. Non-compliant companies will process illegitimate expense claims, which will land you in hot water if discovered by HMRC.

A credible and established company

Focusing solely on the benefits an umbrella company can offer you is a trap some contractors fall into. It’s imperative you investigate the organisation as a whole and its history. Some questions to consider are:

  • Is the company a member of any associations or industry bodies (such as the FCSA)?
  • Is it a long-standing company?
  • Does it have a solid reputation?

It’s also a good idea to ask people in the industry for recommendations.

In addition, you should stick to UK based organisations to prevent issues with unpaid tax and avoid umbrella companies that claim to be “HMRC approved”.

For more information, check out our finance director, Andy Gunson’s piece in this month’s Recruitment International Magazine.

Have your say

Are you a contractor? What do you look for in an umbrella company? Join in the discussion on Twitter, or leave a comment below.