5 risks of working with a non-compliant umbrella company

While many umbrella companies are compliant with UK tax regulations, there are a few bad eggs to watch out for which could put contractors at risk in a number of ways. In this blog, our knowledgeable team share their insight into 5 risks of working with a non-compliant umbrella company. 

1. The responsibility falls on you 

Contractors are responsible for paying the correct amount of Income Tax and National Insurance – even if you were not aware you were opting in on a tax avoidance scheme, you are still breaking the law by filing an incorrect tax return. 

2. The take home pay is (unfortunately) too good to be true

Umbrella companies selling pipe dreams, such as a take-home pay over 85% are highly likely to be engaging in tax avoidance. Yes, you’ll temporarily have more money in your bank account but you’ll have to give it all back at some point or another. Avoid getting a nasty tax bill and ensure you work with an umbrella who is accredited by Professional Passport, the FCSA or the APSCo.

Use HMRC’s online tax calculator to confirm how much tax you should be paying based on your income. 

3.You put your reputation on the line 

Not only could working with a non-compliant umbrella mark you as a high-risk taxpayer, but also puts your professional relationships at risk. 

Check out our useful blog which offers advice on how to spot an umbrella tax scheme to mitigate your chances of accidentally getting involved. 

4. Criminal conviction 

Lying to or misleading HMRC could result in prosecution and conviction. 

5. You’ll have to repay the missing tax upfront                                                                 

If HMRC ends up investigating you, you’ll be given an Accelerated Payment Notice which requires the individual to pay the missing tax immediately. 

Have you been tricked into a tax avoidance scheme involving a non-compliant umbrella company? Your best course of action is to get in contact with HMRC immediately via email at [email protected] and they can help you settle your tax affairs in a way that suits you. 

By disclosing your involvement in a tax avoidance scheme (whether it began with intent or not) you will minimise penalty charges on the tax you neglected to pay and avoid additional costs such as investigation and litigation. 

We hope you found this article helpful and that you’ll take care when deciding on an umbrella company. 

To get in touch with our team, please contact [email protected]. 

Mint is proud to be an accredited umbrella.