Agencies and Payroll companies

[derek]

Is anyone working for an agency and still being paid via a payroll company? I found a document on the shipshape accounting website that shows that the agencies are getting a kick back from the payroll company for every subby they force to use their services. It says and I quote "
[h=3]Low cost umbrella from as little as £8.45 per week[/h] If self-employment is unsuitable, for instance if the worker is under supervision, direction or control – we can offer umbrella without expenses for only £16.90 per week, with scope to reduce this further down to £8.45, should the agency wish. For your contractors, this should help take the sting out of no longer being able to claim tax relief on expenses.
[h=3]Generous agency rebate equivalent to 50% of the payroll fee![/h] What’s more, Ship Shape will split the payroll fees with the agency in what is probably the most generous rebate on the market."

I always thought there was something suspect about the increase in payroll companies and now I know why many of us who have used agencies in the past have been forced to use payroll companies. Looks like all the agencies have been at it.

You can see the document here - Umbrella Schemes - Ship Shape Accounting

 

[Adam W]

I did a days work for an agency which used Shi*shape once before.
It was agreed with the agency that I wouldn't be charged the margin fee because it was only one day. 6 weeks later I still hadn't been paid. They eventually paid me, minus the margin fee, which they flatly refused to take off. Fortunately the agency was only in Southampton so I was able to go in there and sort it out face to face; suffice to say I won't be using them again, which is a shame because on paper Shi*shape look like they're not as bad as some of the thieving parasitic scumbag umbrella companies.

 

[Deleted member 26818]

I doubt that this is a new thing.
Agencies have always only allowed us to use certain payroll companies, one of which will likely be owned by the agency.
I have had the experience of phoning an Agency to query a payment and been transferred to the payroll company across the other side of the office.

An agency called BMSL, used to run one of the original Umbrella companies many moons ago where for the one off fee of £80 you became a director. You would then be paid the minimum wage per hour and any left over after tax and NI (including the Employer's NI contribution) had been deducted would be paid to you as a dividend minus corporation tax.
Problems with this, is that if you were paid 10 hours but only worked 8, they would pay you 10 hours at the minimum wage.
They would not deduct your expenses from your earnings.
By becoming a director, you become liable for any tax debts incurred by other directors.
You remain a director until you either resign or the company is wound up.

With the current umbrella companies (I've only worked for one), they will only deduct expenses which they agree or that you can provide copies of receipts for.
The Employer's NI contributions are deducted from your money
Allthough you are treated as beng employed, they do not provide you with a P45 or P60.
Oh and of course they will be charging you for the privilege of being paid.

I now only work for agencies which pay CIS.

 

[alanl]

Spin, the tax rules changed in the new tax year (April 6th?), so that most people cannot claim expenses for travel or subsistence any more.
Umbrella Companies are now trying to justify their existence. I'm registered with 2, both have been emailing me promoting the benefits they offer, as they know that people will be leaving them, as their main benefit, the claims for travel and food has now gone.
As for the subsistence claims, I know people who were really taking the pee - I've never bothered (being too honest!) but a site I was working on, most were claiming £20 a day for subsistence as well as petrol - they were booking a 12+ hour day so were getting 2 meal allowances, but were bringing in their sandwiches. If caught, they'd be fined by HMRC (no receipts to prove etc), but they reckoned they'd never be caught. This loophole/dodge has now been closed from 3 weeks ago.

 

[Deleted member 26818]

Was not aware of the changes, but after reading the HMRC policy paper and related articles, I am not sure that the changes will have any real effect.
It appears that the changes will still allow travel and subsistence to be claimed for those not under a fixed term of contract and for workers who work somewhere other than their usual place of employment for a period less than two years.

From what I understand, only one rate may be claimed for subsistence unless the worker starts earlier or finishes later than is usual. Working 12 hour shifts would only allow the 10 hour rate (£10) to be claimed.
If a worker's usual shift is 10 hours and they come to work 2 hours early then a breakfast rate (£5) may also be claimed. If they work 2 hours later, then an evening meal rate (£15) may also be claimed. A worker who started early and stayed late can claim all three rates.
My understanding, is that the scale rates were introduced to save larger employers from having to collect receipts from their employees, and their use has to be agreed between the employer and HMRC.
HMRC have allowed the mileage scale rate to be used by self employed workers, but have not yet (to my knowledge) allowed the use of the subsistence scale rates by self employed workers.
In any event, it is for the employer to police any claims made by their employees and any fines for bogus subsistence claims from HMRC, would be levied against the employer not the worker.