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Best Pay Umbrella Service

Best Pay Umbrella Service

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I am always dubious about these Umbrella Companies but I have a client who is currently on a low salary and dividend route who has been talking to "mates down the pub" who are with Best Pay and are paying hardly any tax yet take home 90% of their earnings.  He is not a risk taker by nature and although he wants to take home more and pay less tax (as we all would) he is also aware that there may be a catch.

I have had a quick browse of their website which all seems a bit too good to be true.  Has anyone else had any dealings with Best Pay or similar?

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By Happy Up North Accountant
21st Mar 2013 10:26

I have one

I actually have my own Umbrella company - very small and very difficult to set up to make sure it's compliant.

I would NEVER advertise that you can take home x% of your pay and any company that does is being very flexible with the truth - understandably so however, it's a very saturated and competitive market.

It completely circumstantial and depends upon the specific conditions of the operative. Basically, Umbrellas have overarching employment contracts to ensure that the maximum amount of employment expenses can be claimed on every pay day - things like mileage, subsistence and even things like eye tests etc can be claimed, if done properly!

I only really consider those already in temporary employment but who can't claim expenses to get the benefit of a PAYE umbrella. Otherwise they incur the umbrella fee and risk having a portion of their wages needlessly taxed.

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Replying to michaelblake:
Red Leader
By Red Leader
21st Mar 2013 10:38

Parasol are a big legit player in this area. Look at their website for comparison.

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By Happy Up North Accountant
21st Mar 2013 10:43


Although many operatives of Parasol have complained about it on other forums. To my mind the best one is Gabem - I have no affiliation with them what so ever, but even I have to admit they are on the ball.

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By frustratedwithhmrc
21st Mar 2013 12:30

There is a difference between Umbrella companies and 'others'

Umbrella companies have been around for donkey's years and are just a way for someone to operate as a contractor with a limited company behind them (VAT, PAYE, etc.) but without the hassle of doing the administrative work.

The only way that a genuine umbrella can justify its fees is through the dispensations that they claim to offer on travel, accommodation, meals, etc. These are usually inflated to show the maximum amount possible annually.

Parasol are an example of a genuine umbrella company.

The 'others' are typically companies working at the margins of tax law and are the ones that offer headline rates of ~90% net return on client invoices. Now clearly this cannot obviously be achieved through a PAYE umbrella route or low salary + dividends route as the optimum here would be ~78% net return on client invoices (given very low expenses and 20% corporation tax). So how are Best Pay doing it? Opus Management offer a Focus Managed Service Trust (FMST) service."An Example of FMST benefiting a Contractor. A Contractor works for 6 months on a project and earns £100,000. He is able to have the trust hold £50,000 of that income to be taken over to the next tax year. He then pays Tax and NI on the £50,000 that he has. If the contractor is not able to secure a role the following year then he is able to request the £50,000 from the trust to form his second year's salary and is taxed on that with the advantages of another year's allowances. This is exaggerated but shows the point. This is a real benefit to contractors working in this recessionary environment." I wouldn't touch this with a 10 foot bargepole. It's got "HMRC please investigate me" written all over it. Even if it was determined to be legitimate, it would only be after the substantial costs of a tax investigation going on for years. All to save 10-15% of tax as opposed to a low salary + dividend based limited company that you own and control? I don't think so.

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By Happy Up North Accountant
21st Mar 2013 14:37

Completely agree

I chuckled at the comment "It's got "HMRC please investigate me" written all over it".

We operate strictly away from these dodgy practices - but all Umbrella companies are under constant review with HMRC and with other bodies such as the UK boarder agency. I suppose that's the point - we take the stress away from agencies and then do our best to help the operative claim expenses. Dispensations merely mean you don't have to report these expenses on a P11D - the main crux is assessing whether or not the contractual terms of things like a temporary workplace and agency workers regulations are above board.

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Replying to Cheshire:
By frustratedwithhmrc
21st Mar 2013 14:55

Don't misunderstand me

Happy Up North Accountant wrote:
We operate strictly away from these dodgy practices - but all Umbrella companies and under constant review with HMRC and with other bodies such as the UK boarder agency.

Don't misunderstand me. I am not saying that all umbrella services are dodgy and quite realise that one's like yourself provide a valuable service to contractors that want to avoid the hassle of running their own company. Equally, management of expenses and pre-negotiated dispensations are all good and valuable things.

What I AM saying though is that I've looked at (a.k.a Opus BestPay Limited) and from the details of their offering which aren't disclosed on the main website itself, usually a sign of dodgy practices, they are essentially offering a combination "trust/loans" package to defer payments to non-working periods to get this 90% profit extraction.

Not necessarily illegal, but in the "Jimmy Carr Loans" part of the tax avoidance market rather than just an "Umbrella Company".

In fact I presume that they have plastered "Umbrella company" all over their website so that the people they are sending invoices on behalf don't investigate too closely and the companies in receipt of said invoices don't look too closely either.

Quite a neat bit of camouflage actually, but probably a disservice to genuine umbrella companies. 

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By loopssmith
03rd Apr 2013 09:39

All UK Umbrella Companies – I

All UK Umbrella Companies – I’ll repeat that – all UK Umbrella Companies operate PAYE. This means that you will pay your tax as you go along in exactly the same way as a permanent employee. However, and this is vitally important, ALL Umbrella Companies operate under the same rules and regulations which means that there are no magical formulas, no elaborate schemes and no creative accounting.

The only way your earnings can be higher with one Umbrella Company than another is if you claim more expenses through one than another. But as the amount you spend won’t change, if you move from one Umbrella Company to another it’s a bit of a moot point. You know what you have spent whilst working on your assignment and HMR&C tells you what you can claim as an expense. So what happens if you claim for something you didn’t actually pay for? In short, you will have to pay back the tax benefit that you had and HMR&C may decide to fine you as well. Well that shouldn’t add up to much should it? £35 per day for 250 days a year at 40% = £3,500 (and that’s just the tax)!

Certain Umbrella Companies encourage you to claim, whilst others automatically add, an un-receipted meal allowance of up to £35 per day. This is very misleading and can leave you with a very large tax bill and potential fine.

Any Umbrella Company making such a claim, will have it somewhere on their website or within their T&C’s that, although they won’t need receipts to process your expenses, you will need them in-case HMRC contact you.

If you find yourself under an HMRC investigation, you will be expected to prove that you have incurred all the costs you have claimed. If you can’t provide receipts to back this up, you will find yourself in a lot of trouble.

An Umbrella Company's role is to ensure that you are paid on time with as little hassle as possible and to help you understand what you can and cannot claim legitimately.

Hope this helps!

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Replying to Tax Dragon:
By frustratedwithhmrc
03rd Apr 2013 14:07


loopssmith wrote:
An Umbrella Company's role is to ensure that you are paid on time with as little hassle as possible and to help you understand what you can and cannot claim legitimately.

I think the point here is that BestPay are saying in big letters all over their website that they are an "Umbrella company", but there are no details on their website to determine whether this is really the case or not.

It is only when you look under the covers that you find that they aren't what they are pretending to be (i.e. an "Umbrella company"), but rather that this appears to be camouflage for a tax avoidance scheme which uses a trust to defer tax on earnings into a future tax period when the contractor is not earning.

The reason for this camouflage? I suspect that if they said on their website what they were, then many agents would refuse to deal with them on the basis that they wouldn't want to get dragged into an HMRC investigation in which they had been an unwitting participant. 


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By Bansi
08th Apr 2014 15:47


I had a look at this and initially sounds too good to be true and reading the comments above still not totally clear so will err in the side of caution and steer clear.  How can HMRC allow these operators to do business and promote what is potentially illegal??????

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By wiggstaa
10th Jul 2015 15:15

Best Pay

Just to clarify, Tax avoidance is not illegal, tax evasion is.


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