Who would get their fingers burnt?

Who would get their fingers burnt?

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I know that employment status for those who class themselves as self-employed is determined using various factors and guidance which can (and has been) sought from HMRC's employment status manual. Let's assume we all know the basic arguments.

What I am curious about - Umbrella companies who offer invoicing and admin services to subcontractors as opposed to the full PAYE / expenses route. Many market themselves as providing a "payroll" solution to self-employed people and the perception seems to be that because they are a buffer between the end client and the subcontractor they solve the employment status question. Even when the end client provides transport and a great deal of control.

Surely not?

So far as I can see the arguments go:

From the point of view of the end client

We do not deal with the subcontractors directly. We deal with the umbrella company and allmost all of our contracts are temporary and short-term.

From the point of view of the "umbrella"

We do not find work for the subcontractors they find work and come to us. We provide no control or direction in how and where they perform their job.

Surely the buck has to stop somewhere and I can only imagine it would be with the end client?

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By mrboroaccountant
05th Apr 2012 08:40

This is obviously quite a specialised arrangement. I imagine there would be other factors involved too such as the subcontractors having their own insurances (although from what I hear this is not always the case).

Frankly I think it stinks - as you say, IF it should be employment, the buck has to stop with someone. All parties are walking on a tightrope and it would only be a matter of time before they trip up and HMRC investigate.

Why not just nip it in the bud and go full PAYE umbrella? Due to the aggresive expenses regime of the umbrellas it is usually worth it.

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