Recruitment Agency Pressure on Umbrella Company Choice

Hi Experts

Problems continue to arise with my recruitment agency's umbrella company service. They state that the umbrella company they use is a sister company/affiliated to the agency, and as such I cannot find the best umbrella company for me.

Surely I should be able to exercise the right to use a more efficient umbrella company administrator in order to maximise benefits whilst reducing mistakes?

My question is the agency allowed to dictate which umbrella company I use when they clearly have a vested interest and does not reflect my best wishes or interests?

Thanks

Andrew

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Dear Andrew

This isn't exactly an answer to your queston as my area of expertise is umbrella company expenses.  If recruitment agencies insist on using a specific umbrella company it will become more common that when a worker moves to another agency there will be a move to another umbrella company.

It follows that it is more likely that contractors will work on one engagement/one workplace per umbrella company resulting in loss of tax relief on travel & subsistence.

Relief for travel expenses is the purpose of the umbrella company and if all recruitment agencies adopt the same approach then relief for travel expenses will be, at best, severely curtailed.

Bob Jones

Independent Tax Expert

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Excellent reply Bob, and this is something we have tried to get across to many recruitment agencies in the past. Some agencies unfortunately do not quite have the contractor's best interests at heart and therefore trying to get the tax implications across to the agency is like flogging a dead horse in most cases where this will apply!

When a contractor operates in a limited company capacity, it should be down to said contractor to manage his or her own tax affairs and not be railroaded in to using any other payment solution, just because it suits the agency, particularly if it proves detrimental to ones tax status!

I accept that agencies do not want to bear any third party debt transfer liability as a result of any unpaid taxes arising from the contract and of course they will say they will only allow a contractor to use x,y or z umbrella company as they have 'vetted' those companies.

But lets face it the standard PAYE umbrella company model isn't going to pose any such issues to the agency and this isn't a difficult area for the the agency to verify, should they actually care to take the time to do so.

I suspect the agency that Andrew is referring to begins with an H, are based in Reading and their own umbrella company that they provide preferential payment terms to begins with a C??? Am I in the right ball park?
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Ky Smith (MD)
GoUmbrella