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How to Spot a Fraudulent Umbrella Company

How to Spot a Fraudulent Umbrella Company

How to Spot a Fraudulent Umbrella Company

FCSA Accredited New Red Planet highlight Mini Umbrella Co’s and what to look out for in your supply chain

HMRC updated their Mini Umbrella Company fraud guidance on the 10th August 2022 with one tiny sentence – The additional sentence is as follows: 

“These are some of the signs to look out for, although should not be taken in isolation. Most mini umbrella companies will display most, if not all, of the signs in the following sections.”

Although this does not have as much of an impact on the validity of the previous guidance it has been included to highlight that only one of the signs could mean you are using a Mini Umbrella solution.

As mini umbrella companies are low down in the supply chain it may be challenging to spot them. You must be vigilant, especially where the employer of the worker is not the umbrella company you have a contract with. A good starting point is to complete regular due diligence checks.

A list of things to look out for are detailed below:

Warning signs to look out for

Unusual company names

Multiple companies are often set up around the same time and given a similar or unusual name. The registered address may not seem suitable for their types of business activities.

Unrelated business activity

The business activities listed on Companies House entries will often not relate to the services provided by the workers.

Foreign national directors

Foreign nationals who have no previous experience in the UK labour supply industry, are often listed as directors. They can replace a temporary UK resident director after a short period of time.

Movement of workers

Employees may be moved frequently between different mini umbrella companies.

Short-lived businesses (also known as transient businesses)

These individual mini umbrella companies have a relatively short lifespan (often less than 18 months) before being allowed to be dissolved by Companies House as they do not meet filing obligations. New mini umbrella companies will then take their place in the supply chain.

You should notice this as you may find that you need to issue a new key information document to workers on a regular basis.

Information from sources such as the Companies House register might help you to spot warning signs when completing your quarterly employment intermediary reports.

Warning signs to look out for

What HMRC is doing about mini umbrella fraud

HMRC’s Fraud Investigation Service is using both its civil and criminal powers to challenge those involved in mini umbrella company fraud and those facilitating it.

HMRC has deregistered tens of thousands of mini umbrella companies who they believed were involved in one or both of the following:

  • exploiting the VAT Flat Rate scheme
  • exploiting Employment Allowance

Where investigations established that a business in the supply chain knew, or should have known, that there was fraud, HMRC has taken steps to deny other businesses in the same labour supply chain the right to recover VAT input tax.

Input tax is the VAT added to the cost when a person or business buys goods or services that have a VAT liability.

In 2017, HMRC introduced the Trader of Limited Cost Legislation after seeing a surge in the number of mini umbrella companies. This helped to remove a number of businesses setting up mini umbrella companies.

HMRC has been working with and continues to collaborate with trade bodies and other government departments to raise awareness of the mini umbrella company fraud model.

New Red Planet highlight Mini Umbrella Co’s and we are in contstant consultation with the FCSA, who work closely with Government and HMRC on issues of this type.

If you have any questions about how to protect you and your workforce from Mini Umbrella Fraud – Contact us at New Red Planet – who are an FCSA Accredited Umbrella Company and compliant with all HRMC laws and legislation.

Find out more

If you would like to know more about New Red Planet Products or services, request an information pack by completing the quick form below

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HMRC continue to name and shame tax avoidance schemes and those involved in the supply chain

HMRC continue to name and shame tax avoidance schemes and those involved in the supply chain

HMRC continue to name and shame tax avoidance schemes and those involved in the supply chain

More firms named in HMRC Clampdown on Tax Avoidance Schemes

HMRC continue to name and shame tax avoidance schemes and has shared another four companies, on their ‘named tax avoidance schemes, promoters, enablers and suppliers’ list and now takes the list to 11 on their website with many more yet to be named.

The company names can be found on HMRC’s website under the page for the Current list of named tax avoidance schemes

The 4 new named companies on the HMRC list were found to be using Tax Avoidance Schemes.

What HMRC Uncovered

HMRC found the main theme of the schemes being used is the worker receives two payments, of which the second has not been taxed under PAYE, disguised as a loan or grant.

HMRC are looking to clamp down on these so-called Loan/ Grant Schemes as they are missing out on monies owed to HMRC but because they also leave in most cases, the worker, recruiter or end client to pick up the bill, as many of these non-compliant payroll companies will close overnight.

According to the FCSA website – 3 of the 4 most recent companies named are now in the process of insolvency.

Using an FCSA Accredited Umbrella company offers Protection

How To Protect Workers, Recruiters And End Clients

The only way to fully protect contractors, recruiters and end clients… is to choose an FCSA Accredited payroll provider who has many checks in place to guarantee that all its partners work within the lines HMRC set out.

To ensure you’re always up to date – visit the government’s website

If you want to check the very latest named and shamed tax avoidance schemes, you can visit the following page on the government’s website: Current list of named tax avoidance schemes, promoters, enablers and suppliers. It will provide all the information you need about each named company and advice if you’ve engaged with one for your payroll.

Conclusion

Remember – first things first – pick a compliant umbrella company like New Red Planet and rest assured you and your tax affairs will be managed correctly and in accordance with all UK Tax and Employment laws.

If you are looking for a reliable, best-in-practice umbrella company that prides itself on its client-focused approach, contact New Red Planet today using the form below or call us on 0161 713 1730.

Find out more

If you would like to know more about New Red Planet Products or services, request an information pack by completing the quick form below

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Best Umbrella Company

Best Umbrella Company

Best Umbrella Company

How to choose the best umbrella company for your needs.

You have an upcoming assignment and you’ve been instructed by your agency that you will be getting paid via an Umbrella Company but are unsure exactly what an Umbrella Company is. 

In this article – as an FCSA accredited payroll provider – New Red Planet will explain what an umbrella company is, how it can benefit you as a contractor, and why you should choose an FCSA Accredited Umbrella for your on-payroll assignments.

What is a an Umbrella Company?

In summary, an umbrella company is the main alternative to creating your own limited company as a contractor.

The primary responsibilities are to supply you with employment status (and related statutory rights) while on assignment and to manage all your tax obligations to HMRC for your work.

Umbrella companies are becoming more prominent in the contractor marketplace since the changes to IR35 legislation in the Public Sector in 2017 and in the Private Sector in 2021, which saw many contractors moving to on-payroll assignments, the majority of which are via an umbrella company.

Question Marks - how to choose the best umbrella company

What to look for when choosing:

  • Every provider should process your payment in the same way.
  • Don’t be fooled by umbrellas that offer you higher take-home pay. We all abide by the same tax laws so take-home pay should be the same.
  • Compliant Accredited umbrella companies will have your best interest at heart
  • The FCSA is the UK’s most recognised industry body dedicated to ensuring the supply chain of temporary workers is compliant and ethical.
  • Great customer service and track record of compliance.
  • What benefits do the umbrella company provide compared to others Same Day.
    • Faster Payments
    • Referral Rewards
    • Unlimited Support
    • A phone line you can call and actually speak to someone on
    • Introductory offers

New Red Planet & FCSA

New Red Planet’s accreditation comes from FCSA (The Freelancer & Contractor Services Association), The UK’s leading membership body dedicated to raising standards and promoting compliance for the temporary labour market.

FCSA’s “Code of Compliance” is recognised as the gold standard in the industry, and its members go through the most stringent audit processes on an annual basis.

  • The FCSA Code of Compliance has been developed by Ernst & Young, in consultation with HMRC, and is available to the public on the FCSA website.
  • All FCSA Accredited Members are tested annually against the FCSA Codes of Compliance by independent, carefully selected assessors.
  • The assessors are top-tier, regulated accountants and solicitors bound by their own professional standards and code of conduct and are independent of the FCSA.
  • The FCSA Codes of Compliance are continually updated to reflect current legislation.
  • Non-compliance by FCSA Accredited Members results in the suspension or termination of FCSA Accredited Membership.
  • No FCSA Accredited Member is allowed to operate Offshore Schemes, Loan Schemes, Trusts, Managed Services Companies Schemes, Pay-day-by-Pay-day models, or similar.

FCSA accreditation logos

In Conclusion

Remember – first things first – by picking a compliant umbrella company like New Red Planet, you can rest assured you and your tax affairs will be managed correctly and in accordance with all UK Tax and Employment laws.

If you are looking for a reliable, best-in-practice umbrella company that prides itself on its client-focused approach, contact New Red Planet today using the form below or call us on 0161 713 1730.

Find out more

If you would like to know more about New Red Planet Products or services, request an information pack by completing the quick form below

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Securing work after RTW goes digital on October 1st

Securing work after RTW goes digital on October 1st

Securing work after RTW goes digital on October 1st

Securing work after RTW goes digital on October 1st will be quite a job without an in-date passport.

Changes to Right To Work checks – In under eight weeks, the Home Office’s new Right to Work changes mean any contractor without an in-date British / Irish passport, or in-date visa, will not be able to get jobs remotely, writes Keith Rosser, chair of the Better Hiring Institute. 

The background is much brighter.

Hundreds of thousands of UK workers (including contractors) have benefitted from temporary right-to-work changes during the covid-19 pandemic.

And those changes enabled people to get jobs remotely, online.

For anyone without in-date passports this is all going to change, and soon. In particular, from September 30th 2022, there will be no more right to work checking by video interview.

Hiring done the old-fashioned way

I’m pleased to say I’ve personally helped drive this permanent change to what will be digital right-to-work checks, to enable entirely digital-remote hiring.

But there is a gap.

Under the current proposed scheme which is centred around the usage of certified digital identity providers, any contractor with an expired British or Irish passport, or any contractor without a passport entirely, will not be included in the scheme.

That exclusion means; they will be left to have to secure work the old-fashioned way – by attending, in-person, a hirer’s physical office.

Unfortunately, delays at the UK Passport Office compound the issue. That’s why I warned ContractorUK readers about this back in May.

But the current delays are so extensive that any contractor who is reading this now with a passport soon to expire is very unlikely to be able to renew in time.

Not having an in-date passport could cost some contractors that lucrative placement they’ve got their eye on!

Checklist paper

Working with the UK government

Research carried out alongside The Open University’s Professor Jon G Hall has identified as many as one in five UK citizens as being without in-date passports.

It’s a statistic that becomes worse in the regions of the UK, furthest from the major cities.

The previous minister for ‘Levelling Up,’ and the new minister (following the mass resignations that rocked Number 10), both wrote to Home Office on my behalf outlining the issue and the potential solutions.

I have been privy to a letter sent to the House of Lords from the Minister of State acknowledging the issue, thanking me for my efforts in transforming digital hiring and — most importantly — agreeing to look at the proposals with the aim of finding a solution before September 30th 2022. So I am hopeful we can still find the answer in time.

It would be a great shame for many work-seekers and contractors if a solution cannot be found and quickly implemented.

Finally, first things first – stopping the emergence of second-class job candidates

But more immediately, my sights are fixed on ensuring that work-seekers without valid passports don’t become second-class job candidates.

Fortunately, there is a ‘Live Event with UK Home Office’ planned in just four weeks – where employers and others can ask officials any questions about the new scheme.

But that September 1st event is too close for comfort to the deadline of September 30th, after which time individuals will no longer be permitted to verify their right to work remotely if they have an expired or out-of-date passport (or birth certificate).

Due to the positive sounds so far from The Home Office, I am still confident that we can arrive at a scheme by the deadline that is fair for all.

8th August 2022 – Story courtesy of ContractorUK and written by Keith Rosser (Chair of the Better Hiring Institute).

New Red Planet – Compliance – FCSA – Security – Changes to Right To Work checks

New Red Planet’s accreditation comes from FCSA (The Freelancer & Contractor Services Association), The UK’s leading membership body dedicated to raising standards and promoting compliance for the temporary labour market.

FCSA’s “Code of Compliance” is recognised as the gold standard in the industry, and its members go through the most stringent audit processes on an annual basis.

  • The FCSA Code of Compliance has been developed by Ernst & Young, in consultation with HMRC, and is available to the public on the FCSA website.
  • All FCSA Accredited Members are tested annually against the FCSA Codes of Compliance by independent, carefully selected assessors.
  • The assessors are top-tier, regulated accountants and solicitors bound by their own professional standards and code of conduct and are independent of the FCSA.
  • The FCSA Codes of Compliance are continually updated to reflect current legislation.
  • Non-compliance by FCSA Accredited Members results in the suspension or termination of FCSA Accredited Membership.
  • No FCSA Accredited Member is allowed to operate Offshore Schemes, Loan Schemes, Trusts, Managed Services Companies Schemes, Pay-day-by-Pay-day models, or similar.

FCSA accreditation logos

In Conclusion

If you are looking for a reliable, best-in-practice umbrella company that prides itself on its client-focused approach, contact New Red Planet today using the form below or call us on 0161 713 1730.

Find out more

If you would like to know more about New Red Planet Products or services, request an information pack by completing the quick form below

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The Public Sector Fraud Authority has been launched by the government

The Public Sector Fraud Authority has been launched by the government

The Public Sector Fraud Authority has been launched by the government

Securing work after RTW goes digital on October 1st will be quite a job without an in-date passport.

The Public Sector Fraud Authority has been launched by the government – The government has launched its new Public Sector Fraud Authority – Jacob Rees-Mogg, Government Efficiency Minister, has launched a new body of the Government named the ‘Public Sector Fraud Authority’.

With an aim to halt fraud expensed by the public purse, the team will consist of counter fraud and data ‘experts’, with a first-year target of saving the taxpayer £180,000,000. 

New Red Planet and other FCSA Accredited partners feel that this is definitely a move in the right direction to stamp out non-compliance in the sector.

The team, looking into the Bounce Back Loan scheme, has been equipped with £25 million of funding, with Rees-Mogg stating:

“They (fraudulent attacks) are an attack on the emergency services whose funding they deplete, similarly they steal money from infrastructure projects”.

Public Sector Fraud Authority has been set up - with mini umbrella companies in it's firing line.

Mini umbrella companies are also in the vision of Rees-Mogg and his band of fraud busters, as they clamp down on the too-good-to-be-true umbrella schemes, which leave contractors extremely exploited, vulnerable and defenceless against tax bills.

Interim Public Sector Fraud Authority CEO, Mark Cheeseman OBE said about the new Public Sector Fraud Authority:

“The creation of the Public Sector Fraud Authority represents a landmark in our fight against public sector fraud. We know that fraudsters are a committed, capable and evolving adversary.

To respond to this we must raise our ambition and challenge ourselves to increase our impact on this often unseen and underestimated crime. The PSFA will support public servants across government and public bodies to take that step – to innovate and modernise our approach to fraud.”

The recent success of the National Fraud Initiative (NFI), which between 2020 and 2022, detected and prevented more than £200m of public sector pension fraud, paved the way for the new team to be established.

Read the full Gov.uk article here

FCSA accreditation logos

How We Can Help…

If you are looking for a reliable, best-in-practice umbrella company that prides itself on its client-focused approach, contact New Red Planet today using the form below or call us on 0161 713 1730.

Find out more

If you would like to know more about New Red Planet Products or services, request an information pack by completing the quick form below

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