LSP Become Supply Chain Partner of FCSA
HM Revenue & Customs have issued new guidance on contractors employed by umbrella companies this week.
Many umbrella companies are compliant with the tax rules, but some use contrived arrangements that claim to allow agency workers and contractors to keep more of their earnings. These arrangements are tax avoidance schemes and most of them do not work. Some umbrella companies benefit financially by using contrived arrangements like disguised remuneration to pay workers. For example, an umbrella company might want to claim that a payment is non-taxable to try to avoid paying employer National Insurance contributions (NICs) on it — currently 15.05% of the payment.
Using these non-compliant umbrella companies could leave you at risk of being involved in a tax avoidance scheme, and owing HMRC money, even if you did not set out to try to avoid tax.
You are responsible for your own tax affairs and for paying the correct amount of Income Tax and National Insurance contributions. Most tax avoidance schemes simply do not work and anyone who uses them is at risk of ending up with a large tax bill. You may also find that the umbrella company has deducted a fee (this may be called a margin) from your earnings for using their services, which could be higher than the standard fees. Any tax you owe will be in addition to this.
How do LSP mitigate these risks?
LSP Renewables are committed to dealing with businesses in a compliant and legal manner and have a vetted preferred supplier list of umbrella companies all of whom are accredited and/or registered members of either the Freelance & Contractor Services Association (FCSA) and/or the Association of Professional Staffing Companies (APSCo). In addition to this LSP Renewables have committed and signed up to the Supply Chain Partner Charter of the FCSA which creates a clear framework of principles and values that support and underpin compliance throughout the supply chain. The purpose of the FCSA is to bring assurance to the complete supply chain, from Contractor to end client to HMRC, whilst at all times ensuring the Contractor is protected.
Get in touch with us to find out more about our commitments or to discuss any element of working as a Contractor on firstname.lastname@example.org