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Umbrella corporations?

Discussion in 'Supply teaching' started by lauraee66132, Oct 12, 2010.

  1. I'm currently getting an average of a couple of days a week of day to day supply. I'm registered with 2 agencies (and when my other reference comes back, it'll make 3). I have had a couple of phone calls from 2 different 'umbrella corporations' (one on behalf of each agency currently finding me work) and I was wondering if anyone else does this, and if it's worth it? From the gist I've got so far, I get to claim mileage and other expenses in exchange for a fee of between £15 and £20 a week, depending on how much I'm paid, it ties all my day to day stuff together to make one continuous employment. I would think it would be easier in terms of tax etc to do this, but even though I know these guys are running a business and have to make their money somehow, I'm not happy with the idea of paying them some of my money in order to do it.
  2. I'm sorry, this won't be helpful, but I'm in a similar position. As I understand it they don't actually pay expenses (if they did it would be worth it for me) but offset the tax you would have paid on those expenses against your pay, so effectively you pay less tax.
    I've only had 2 days supply so far and am reluctant to sign up too as, if I don't end up earning enough to pay tax this year (this might be the case unless the work picks up dramatically!), then I'll have paid them (£8 a week) for nothing...
    While my agency (can we name them here?) is really keen for me to sign up and guarantees me that I won't get less with the umbrella that on PAYE I'm still not sure about it. I'm interested to hear what other people have to say about this...
  3. This is the thing, my agency called me about them last week, and they contacted me yesterday and I've just read through their contract in the post, the worrying thing being that their fee was not written into the contract, just on a flyer that functioned as a covering letter and on an FAQ page (but the FAQ page wasn't that specific)

    I've filled in some of the paperwork whilst I've been mulling it over, but I'm considering just putting it in the bin to be honest!
  4. My dad gave me a very knowing look when I asked him about it, 'The Umbrella Corporation' is the root of all (resident) evil ;)
  5. Hi lauraee66132
    As an accountant and supply teacher I have come across a number of supply teachers who are operating as a limited company/self employed/umbrella company and saving tax.

    I have looked into to this in great detail and would strongly advise against it.

    Re: claiming mileage/expenses to reduce your taxable income look here:

    <font color="black">HMRCdotgovdotuk- EIM70755 in the seach box. You CANNOT claim expenses - read it carefully.</font>

    Re operating as a limited company (known as an intermediary) and paying dividiends (no nic) instead of salary look here:


    Again - against regs/the law.

    HMRC investigate people as and when they can. They are stretched - so a number of teachers are getting away with it at the moment. The current govt are keen to look into this sort of thing - this is tax evasion - breaking the law!

    I can point you to other blogs/website etc... just let me know through here.

    Being investigated would result in backtax, penalty. Not to mention the stress and cost (you will have to pay an accountant to help provide what HMRC demand of you - attending interviews, providing paperwork etc)

    I have had clients in the past who have sufferd high blood pressure etc... Its not pleasant. HMRC are not pleasant to you if they feel you are trying to cheat them.

    The accountant/provider/umbrella etc dont care , they wont tell you this - they are only after a fee. The buck will stop with you as far as HMRC are concerned.

    My friendly/free advice - dont do it - be an employee on paye. You may be storing up trouble.
    Dont believe a word of umbrella companies and the like - tell other teachers the same.

  6. purple sparkle

    purple sparkle New commenter

    Why do agencies allow this if it is illegal then? I am concerned now because I use umbrella companies to pay me and claim expenses. Nobody has said to me that it is against the law and said that it is perfectly legal.
  7. that will be because either:
    1) the agency doesnt know the rules
    2) the agency has been duped into it
    3) the agency has no scruples
    You see - the umbrella/agency charge you for this - its in the small print.
    A scenario might be - HMRC would go after the agency/umbrella - and they in turn would come to you for missing tax - but they already have the fees thay have charged you.

    purple sparkle - did you look at the link to hmrc website above?
    Does it make sense to you - thats not meant to be any way patronising - I just feel strongly that temp workers are being led up the garden path.
    Check to see if you are really benefititng any way - their (umbrella etc) fees can be quite hefty and can quite often negate any so called tax saving.

  8. purple sparkle

    purple sparkle New commenter

    I have had a look at the one about supply teachers and yes it does make sense but I can't find anything else on HMRC or on the internet which mentions this. I havejust contacted one of my agencies I have just registered with and transferred onto PAYE. 2 agencies I am registered with never gave me a choice of pay options and just put me straight on umbrella!

    I contacted HMRC today regarding advice with tax codes as I am on allowance with one and BR with 3 others. They told me that it would be beneficial to keep my tax code with Key Pay as if I transferred it I wouldn't have paid enough tax through Key and it would be expected off my allowance.

    One umbrella company has my tax allowance code so I was wondering what I should do regarding transferring onto PAYE with the agency. I know it just involves a phone call but will I need to get a P45 from the umbrella company which pays me and hand that back to the agency? So my remaining tax allowance will be transferred onto PAYE. I am also confused because an agency who I never get work from put me with Key pay so it wouldn't be easy just to get a P45 off them. Will that mean I will have to be on BR code for a while until they get this? Also will this have any implications for TAX paid?


  9. purple sparkle

    purple sparkle New commenter

    Sorry that probably doesn't make sense. They said that if I transferred it to another agency my allowance would be no longer with Key so I would have not paid enough tax through that employer so they would expect it back. So it would be easier just to keep the allowance with key pay rather than transfer it if I was to earn above my allowance. Saying that though, if I transfer now, I wouldn't be earning my allowance with key pay so it is perfectly ok

    Im confused on this one.
  10. purple sparkle

    purple sparkle New commenter

    Anyone elses throughts on this? I am actually tempted to phone all my agencies tomorrow and be asked to be transferred onto PAYE. This is causing me stress now.

  11. The first thing is dont get stressed.
    Just put things right from now on.
    I was in your position some time ago.
    The first thing is to contact your agencies and go back as an employee on their payroll.
    If they wont let you do that - find another agency.
    With regard to your tax code - get a p45 from the umbrella and give it to one of your agencies ( the one you work with the most) - if no p45 - ask to sign a p46 - that will give you the full allowance.
    As long as you do some work (even 1 day) with that agency during March (2011) you will receive most of your allowance.
    The other agencies will put you on a BR code - which is about right.

    By the way - I have nothing to gain from this - I just feel strongly about unscrupulous umbrellas etc...Tell other teachers if you get the chance.

  12. PAYE means pay as you earn - so tax is paid as you go along. Theres no issue of you not paying enough tax. - Sometimes HMRC staff are call centre staff and just read from a manual!!

  13. I've copied and pasted your message and emailed the group that pays my salary, asking for their response.

    I will post it on here when I get a response!
  14. purple sparkle

    purple sparkle New commenter

  15. This is where a lot of organisations (including the union) have misinterprted the rules.
    A permenant workplace is not simply one where you work > 24 mnths.
    The 24 mnth rule applies if you go to a temp workplace e.g your perm workplace is Milton Keynes and your employer asks you to go to Oxford. Oxf is then your temp w/place if <24 mnths.
    HMRC specifically quote legislation and case law where a supply teachers place for that time (whether it be 1/2 day or a term or 23 mnths) is still regarded as a permenant workplace for tax purposes. Therefore travelling from your home to that particular school is ordinairy commuting - costs of which are not tax deductible.
    If you read the link very carefully - and if you have time read around the quoted legislation and case law/rules.
    The crux of the matter is what is regarded as a permenant workplace (the union leaflet also states perm w/place = no expenses allowed).
    Places that are not likely to be permanent workplaces will include schools that you attend infrequently
    The above from the union leaflet is in contradiction to the following which is from HMRC website.
    A supply teacher is not attached permanently to a particular school but performs relief duties at any school to which he or she is directed by the employer. The length of the spell of duty at a particular school varies between half a day and a school term (or longer).

    The school at which the teacher is for the time being working is generally regarded as his or her permanent workplace

    I tend to accept what comes from the horses mouth.
    This is borne out by the case (warner v prior) quoted on HMRC website - do a google.
    Travel from your home to a school is not part and parcel of your duties as a supply teacher. The technical term is 'wholly, exclusively and necessarily'. This type of travel is regarded as every day commuting - everybody has to do this.
    The union leaflet is not clear enough - it could be misleading - which would be unfair to teachers.

  16. purple sparkle

    purple sparkle New commenter

    Thanks for your help. I am in the process of sorting things out now.
  17. Your welcome. If you get a chance point other teachers to this thread.
    Im sure this scam along with other issues in the teaching profession - using unq staff etc... will appear in the media at some point.

    PS - its not only teaching but all sorts of temp workers - office staff, medical, drivers, warehouse ... this list goes on.
  18. Thank you supply123x. I too have looked at the links and it seems pretty obvious, even to a layperson who hates 'bureaucracy speak' like me, that supply teachers should not be claiming back tax on travel expenses. I contacted my agency immediately.
  19. Hi Laura -

    This is the reply I received from the company who pay me for my agency - they are called ISS GROUP (issgroup.co.uk)


    Thank you for your email.

    I'm glad to hear that you're happy with our service and I can understand why
    you'd be concerned about this forum message. The payroll structure that the
    contributor is referring to is known and a limited company structure. This type
    of structure involves a candidate being set up as the director of their own
    limited company and receiving a combination of a salary and a dividend payment
    through the company. This used to be a popular payment structure for teachers
    and many teachers were encouraged to be paid this way by their agencies, however
    in 2008 HMRC changed their legislation, making it illegal for teachers to
    receive dividend payments. ISS is not a limited company structure, and you are
    not receiving dividends through our company. Umbrella companies are a standard
    payroll method for agency workers in the UK, and HMRC are very much aware of the
    way that ourselves and other umbrella companies operate. You have a full tax and
    NI record (which is evident on your P45/P60/Statement of Earnings) and the
    expenses that you are claiming are fully legitimate as they are wholly,
    exclusively and necessarily purchased for work purposes. It is actually HMRC
    themselves that recommend the rates of subsistence allowance that we provide our
    candidates with. We are currently paying over 10,000 in the UK and not one of
    them has ever been approached by HMRC with regards to the tax they have paid or
    the expenses they have claimed. I hope I've managed to put your mind at ease -
    if you have any further queries or if you would like something sent to you in
    writing to confirm the above information please let me know.

    Kind regards

    Deborah-Louise Grant,
    ISS Limited
    0800 028 4211
  20. purple sparkle

    purple sparkle New commenter

    Hmmm still not convincing in my opinion. Yeah they might HMRC might have recommended it as some workers can legally claim the allowances but not specifically supply teachers. It does not mention supply teachers...

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