Still time to get a handle on an umbrella

    Many are struggling to get to grips with the new rules affecting IR35 in the public sector. And for some practitioners, the changes don’t just create a conundrum; they are also a genuine threat to their business.

    Practices with a significant number of PSC clients operating in the public sector have found that since 6 April 2017, their clients’ engagements have been deemed ‘caught by IR35.’ They are having tax and NICs deducted at source and, for good measure, may also have seen their day rates slashed to fund employer’s NICs.

    Suddenly, operating through their own limited company isn’t making much financial sense and many have opted to close down their PSC. That’s lost compliance income for the practice.

    However, the changes have also presented an opportunity for accountancy firms which have recognised the value of setting up their own umbrella companies.

    Suddenly, a legislative change which seemed like it would drive profits down has become a genuinely protective measure to drive fee income back up.

    At the same time though, these firms have recognised that an umbrella company also brings with it new compliance burdens – contracts for services with agencies and other intermediaries, contracts of employment for umbrella employees, understanding the complexities of workers’ rights, pay and entitlement to expenses.

    Practices with a small number of public sector PSC clients may have had fewer concerns but that will change when this legislation crosses into the private sector.

    It’s a question of when, not if. So, it might be worth starting preparations for this sooner, rather than later.

    Accountax can help with the initial set-up and the continued successful, compliant operation of an umbrella company.

    If you would like to know more, phone 0345 0660 035 or email mail@accountaxconsulting.com