What Due Diligence Should You Do When Working With an Umbrella Company?

Man on computer

What Due Diligence Should You Do When Working With an Umbrella Company?

The majority of end-clients rely on recruitment agencies to recommend umbrella companies to their contractors, but if you’re in the veterinary sector that responsibility can fall to you. Here we look at what due diligence you should be performing to ensure that the umbrella company your vets choose is fully compliant.


Why compliance matters

At the moment the umbrella market is unregulated. This means that contractors, recruitment agencies and end-clients are at risk if they partner with a non-compliant umbrella company either knowingly or unwittingly. 

The risks for using a non-compliant umbrella can be considerable and include financial penalties, HMRC investigations, and repayment of the amount of money that has been unlawfully withheld from the tax man. It can also mean that your reputation as a trustworthy, conscientious and reliable employer is irreparably damaged. 

It’s vital, therefore, to ensure that any umbrella companies that your vets are dealing with are fully compliant and follow legislative and financial rules to the letter. Your most effective tool to guarantee compliance is the process of due diligence. Let’s look at some of the questions you should be asking.


Who are they?

A simple search on Companies House will provide information about the company, its directors, its history and its provenance. A search for i4, for example, reveals the names of its directors, how long it has been in operation, its registered address, and a ‘filing history’ which dates back to its incorporation in 2005. This bona fide history offers reassurance that i4 is an established company, and that it is based in the UK, not offshore, which can be an indication that there is a scam in operation. It can also identify if any directors have previously been involved in non-compliant schemes, and if any of those schemes are still in operation. You should also investigate any recruitment agencies that you deal with in the same way.


What do they offer?

Non-compliant schemes will offer your vets products which seem too good to be true. This is because they are. Higher-than-the-competition take home rates, ‘tax-efficient’ schemes, paying part of your workers’ salaries through PAYE and the rest through loans or dividends, and claiming to be HMRC ‘approved’ are all signs that an umbrella company is operating non-compliantly. 

HMRC does not approve any umbrella company, and keeps a list of all those which have been found to be non-compliant so you can easily reference companies that you might be considering, to discount them from future use. 


How can you contact them?

Check the proposed company’s website for full details of the products that they offer. There should be a comprehensive overview of everything they do, both for contractors and recruitment agencies (if they offer a payroll product). There should also be full statements on how seriously the company takes its compliance, and what they do to ensure that their products adhere to the latest employment and taxation legislation. In addition, their contact details should be prominent, and getting in touch should be simple and speedy – if there’s no phone number, or if there is one and no one answers when you call, or if your emails go unanswered, you should be alert to a possible scam. Finally check their social media presence for activity – legitimate companies regularly update their LinkedIn and Twitter accounts, interacting with their followers respectfully and in a helpful manner. 

Following simple procedures like these can keep your business and the livelihoods of your vets safe from scammers and their consequences. The best option, however, is to partner with a compliant, responsive and experienced umbrella company like i4 whose record of high-quality products, excellent customer service and deep understanding of the law, enables it to protect your vets while helping their careers thrive. 

If you’d like more information about the services i4 offers you can call us on 0800 084 3058, email us at hello@i4services.uk or fill in the form here.