Any Experience

Any Experience

Didn't find your answer?

Has anyone worked with a service company?

If so, what can you tell me about their operation? How do they get around the loop hole of paying travel costs in wages sacrafice schemes?

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By thomas34
29th Aug 2010 13:00

Service Companies

I think you're probably referring to what are commonly known as umbrella companies - some even use the word in their company title. The gist of their attraction is, as you have mentioned,  paying high (tax free) expenses in lieu of salary and demonstrating that their employees are better off in terms of their take home pay than would otherwise be the case. They charge a weekly administration fee for the privilege of preparing the payslip!

I was asked to look at the figures for a client around a year ago. My conclusions were (rightly or wrongly) that my client ran little risk as far as HMRC was concerned but was surprised that these companies were operating. I suppose that they are deeming their employees to be site-based but don't know their full thinking.

The client concerned is aggrieved now because of the downturn in work and the fact that he's still paying between £40 and £48 per week for the administration fee on a much smaller gross pay.

I'm not sure why HMRC haven't challenged these structures.

 

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