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  • Rob Wilks

Dodgy umbrellas taking advantage of key workers

A BBC Money Box investigation has found that unscrupulous 'Umbrella' companies are yet again rearing their heads, this time by targeting the NHS key workers drafted into the frontline of the coronavirus crisis.

While many of these schemes tend to operate under the radar, the Money Box report detailed evidence of social media adverts pushing workers toward companies that openly promote tax avoidance schemes in return for retaining huge margins (or administration costs). One advert featured on Twitter says: "If you've been drafted in to reinforce the NHS response to the hashtag #coronaviruspandemic, we want to assist you."

Posing as a healthcare worker on a rate £145 a day, the Money Box reporter was told by a UK registered Umbrella company that it was possible to save thousands of pounds ‘legally’ by hiding a large chunk of their salary from the taxman, resulting in a take home pay of 78% of gross earnings. This is more than they would have made through a standard compliant umbrella company, yet seemingly disregards the extreme risk this poses to the contractor.

A representative from an Umbrella comparison site also features in the report. He explained that some of their affiliate Umbrella companies “are taking advantage of a few tax loopholes" and admitted that "the government doesn't like it". Money Box have since confirmed that neither of these two companies featured responded to the findings of their investigation.

Ultimately, a contractor is legally responsible for their tax affairs, including paying the correct tax and NIC contributions. You only have to google ‘loan charge repayment’ for reams of articles on other unfortunate workers that are now having to pay back thousands of pounds in unpaid tax, leaving their finances and wellbeing in tatters. These schemes are being challenged successfully by HMRC, leaving contractors with huge tax bills and distressing hassle.

It is shameful to take advantage of contactors this way, let alone those who have been on the frontline of the coronavirus reponse effort. As ever, we urge all those requiring assistance with an Umbrella company to stick to the FCSA accreditated member list (of which Clipper Contracting are on) to ensure that your payments will be taken care of correctly and compliantly, leaving you free to go about your work with peace of mind.

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