HISTORY OF THE UMBRELLA COMPANY
In April 2007, the Government brought in the Managed Services Legislation (Chapter 9 ITEPA 2003) to combat what was known at that time, as Composite Companies. The Legislation brought an end to Composite Companies overnight which led to them reinventing themselves as Umbrella companies.
The umbrella Company was used in the main as an alternative vehicle to the personal Service Company and was used by workers to supply their services to Recruitment Companies. We saw demand with umbrella Companies increase in April 2017 following changes to the Off-Payroll Working Rules affecting those working in the Public Sector, with further rises in April 2021 following changes to the Same Rules, affecting those in the Private Sector.
PROBLEMS WORKERS FACES USING UMBRELLA COMPANIES
Workers face misleading and unfair deduction from pay. These will include but not limited to, Employers National Insurance Contributions, Apprenticeship Levy, Workplace Pension Contribution and Holiday Pay. In addition, it has been widely reported that many workers unwittingly have been embroiled in tax avoidance schemes operated by some Umbrella Companies. This can lead to HMRC pursuing the worker for unpaid taxes and national insurance .
HOW CAN C4J HELP
It Is Unlawful For Employers, Including Umbrella Companies to deduct Employers’ National Insurance Contribution (ER’s NICs), Apprenticeship Levy, Employers’ Workplace Pension Costs and Holiday pay from a worker’s gross pay.
C4J can assist workers in reclaiming those moneys that have been unlawfully deducted. We will pursue a claim under the Law of Tort. The claim for compensation will normally cover the period of six years prior to the claim being brought. However, it may be possible to have this extended to 15 years if we are able to prove negligence.