5 tips to spot an umbrella tax avoidance scheme

No one enjoys wading through endless admin documents, especially when you’ve got a job to do! That’s why working with an umbrella company is a great way to ensure your protection as a freelancer or contractor. However, with this third-party in charge of your finances, it is paramount you choose the right company – otherwise you could end up in serious trouble with HMRC. While most umbrella companies are tax-compliant, here are a few warning signs of which you should steer clear. 

1. Claims to save you tax

Regardless of which umbrella company you work with, your tax dedication will be the same each time. Any company that claims it can lower your tax bill is likely engaging in tax avoidance. This may seem great at the time, but a few years down the line you’ll be met with a nasty bill to pay.

2. Accreditation badges that don’t exist

If an umbrella company boasts that it is an accredited member of an organisation, make sure it’s legitimate. There have been instances of businesses listing completely fabricated third-party accreditors in an attempt to appear more authentic. Make sure you do your research before agreeing to anything.

We have compiled a list of some trusted associations to look out for instead: 

• Professional Passport
• the Freelancer & Contractor Services Association (FCSA)
• the Association of Professional Staffing Companies (APSCo)

3. Your payslip and your bank account don’t match up 

Make sure you check how much you’re being paid into your bank account is the same as what is outlined on your payslip. If they don’t, it’s time to move umbrella companies!

4. Difficult to contact 

Make sure you’re signing up to an umbrella service that offers around the clock support – and not just via email! If they are guilty of tax-avoidance, they won’t want to make it easy for you to contact them…especially if they are located offshore in a tax haven. 

5. It seems too good to be true

We all know the old saying; if it’s too good to be true, then it probably is. Bear this in mind when deciding which umbrella company to work with. Do they offer a handsome take-home pay over 85%? Is the Umbrella retaining higher margins or fees? Are payment arrangements unorthodox? These are some of the many red flags to look out for. 

Mint Umbrella is accredited by Professional Passport, so contractors can be reassured that they are in good hands when working with us. We believe in 100% transparency, so you’ll always receive a full breakdown of all deductions so there won’t be any hidden costs or nasty surprises later on. 

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