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IR35 - 80% to 95% Umbrella returns too good to be true ?

The last eight months have been a turbulent time for Agency Nurses who like so many Healthcare workers, play a vital role to millions of lives. However, with conflicting information from every angle regarding IR35, you could be forgiven for not being able to see the wood for the trees. So, who do you listen to?

Your accountant … who will tell you that your wages should be paid into your limited company account!

Your agency … who could tell you that your wages should be paid via an umbrella company that they have ‘’APPROVED’’; despite (in some cases) having not carried out any financial audits on the company!

Your friends and colleagues … who will question why you’re not using one of the 100 different umbrella companies offering 80% - 95% ‘take home pay’? Unfortunately with this last option, if it sounds too good to be true, it usually is.

The primary aim of IR35 legislation implemented in April was to provide an even system for all. Some public sector workers are no longer able to receive tax relief via Personal Service Companies (PSCs), with IR35 ensuring that everyone pays tax and NI contributions at the same rate.

If you are currently receiving an 80% - 95% return on your salary each week/month after tax, this would almost certainly indicate that your umbrella company are operating some form of tax avoidance scheme. 

The most popular scheme seems to be the candidate receives 95% of their money paid into their limited company account from their agency via an umbrella company. If you were allowed to be paid the full amount into your Limited company working inside IR35 why does your agency not pay you that way directly without the 5% charge for passing money from A to B? If it sounds too good to be true it usually is.

Whether you are aware of your umbrella company’s actions or not, and if they are operating an avoidance scheme, you will still be liable for any unpaid tax. Most importantly, HMRC will pursue YOU for the monies owed, plus any interest accrued over the period of avoidance.

At McGinley Healthcare, we operate a strict auditing process when adding new umbrella companies to our Preferred Suppliers List (PSL). The large majority of umbrella companies fail to pass our strict audit criteria, with our compliance department carrying out scrupulous checks to ensure we only work with those that perform to the highest standards, from both a service and legal perspective. If you decide to work with McGinley Healthcare via Umbrella or PAYE payment methods, you can be assured that you will not have any nasty surprises from HMRC.

If you are concerned that you are working via a non-complaint umbrella company, we suggest that you either contact McGinley Healthcare or HMRC directly for advice to avoid the taxman knocking on your door.

Working as a nurse, you dedicate your daily life to looking after others and you most certainly deserve every penny you earn for the amazing work you do.

You deserve someone to look after you and your best interests. McGinley Healthcare will always pay the best rates where possible, but as you all know, paying the correct tax is a necessity. No matter how tempting it may be, gaining a short-term advantage will cause you problems in the long-term.

Should you wish to discuss any of the issues highlighted, please contact me on 0203 948 5210 or drop me an email at Julius.kaveh@mcginleyhealthcare.co.uk

Important IR35 sources

https://www.gov.uk/guidance/tax-avoidance-an-introduction

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/594681/CC-FS24_02_17.pdf

https://www.gov.uk/guidance/contractor-tax-loan-schemes-can-cost-you-more

McGinley Healthcare Ltd is a company registered in England and Wales. Registered number: 7216155. Registered office: 56 Clarendon Road, Watford, Hertfordshire, WD17 1DB.

COPYRIGHT MCGINLEY HEALTHCARE

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