Umbrella company's accounts and IR35 checks queried by contractor
I have been looking into the operation of a large Umbrella Company and have been concerned with my findings.
Working in large offices amongst many other contractors conversations always at some point get round to Ltd Companies, IR35 etc. Some things they were telling me regarding their umbrella set-ups just didn't seem right, so I looked into it a bit more.
Here are some of the points that concern me and was wondering if anyone can shed some light on these operations.
1. Although holding the majority of the company shares no-one is issued with a set of company accounts unless they actually ask.
2. Deductions are worked on the 19% corp tax rate, but no-one seems to get an additional dividend at the year end to account for the overpayment of corp tax, due to the marginal relief for small companies to £10k.
3. This would mean that their fee for running the scheme of £75 to £90 per month is in fact at least double this for the average contractor due to the loss of marginal relief.
4. The company director and secretary are actually Ltd Companies with ambiguous names.
5. The one person I know of who has actually asked for a set of accounts found that they were totally different to those lodged with Companies House. The abbreviated balance sheet lodged wasn't even remotely similar.
6. They also found that the turnover was £14k short of what he had actually earned for the period.
7. Their literature talks about each contractor having his own "Personal Service Company", which I would have thought was a very inappropriate and dangerous use of words given IR35.
8. They have what they call their own IR35 monitoring system, which having seen it in action I must say is an incredibly dangerous piece of literature as it does not piece together enough information, or give the contractor an understanding of the process involved, and therefore cannot come to any accurate opinion. It seems more like an arse covering operation on the part of the umbrella company.
As I said I'm curious to understand the workings and if anyone has actually received a dividend? As the companies are obviously held via a holding company are the rules different. Also, what are the IR35 implications of such an arrangement, would such a company name as Umbrella Company 1234 Ltd not have the Revenue breathing down your neck, as this certainly doesn't seem to be the case at present?
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IanL