A cautionary tale – what happened when we Googled “best umbrella companies”
In our industry you have to be fairly thick skinned. The sector comes under fire from tabloids and unions with Umbrella companies being maligned as everything from “pirates” making money out of contractors’ hard work (BBC Yorkshire), to simply a “con-trick” (UCATT).
When is an Umbrella not an Umbrella?
It’s all a question of definition. The term “umbrella” should be used to describe the mechanism by which a worker is engaged under a full overarching contract of employment, working on a succession of assignments, paid PAYE and entitled to all statutory employment rights.
Unfortunately the term has been hijacked by a range of other companies running completely different models, whilst calling themselves “umbrella companies” and so rightly attracting negative media attention.
We decided to conduct a little experiment to see what contractors are faced with when looking for a decent umbrella online. Following a few searches we identified the scope of the issue and the reason why so many contractors are getting hooked in by dodgy providers.
Here are the top ad results we got from Google (company names have been omitted):
Best UK Umbrella Company - up to 90% Returns
100% HMRC Compliant...Offer Outstanding Financial Returns
Best Umbrella Company - Highest Returns
Best Umbrella Company - Take Home 90% of Pay
Despite every single one of these companies promoting themselves as an “umbrella company” they are far more likely to be nothing more than a tax avoidance scheme, something HMRC are going to great lengths to eradicate.
Avoid the impostors
As Accredited Members of the FCSA (the main trade body representing umbrella companies), we fully support their commitment to clearing the name of good umbrella company operators.
FCSA Chief Executive Julia Kermode said: “We really would like to expose bad practice so we are not all tarnished with the same brush.”
As in the online ads we identified, firms posing as umbrella companies will promise you the earth, but beware; they could well end up costing you it.
All legitimate umbrella companies must operate under the same rules laid down by HMRC - avoid any company that tries to tell you differently. There are no magic formulas and no loopholes.
For peace of mind, look out for the FCSA accreditation - Liquid Friday work closely with the FCSA and we are proud members.
This article was originally published on 9th October 2019 and updated on 17th November 2020.