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Compupay Services - Anyone dealt with these?

"Not only free, we'll pay a fee to you to run your payroll!"

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A client of mine runs a small service business, spoke to me about this company "Compupay" (https://www.compupayservices.co.uk/). They have apparently offered to run his 300+ employee payroll - not just for free, but will pay him for the priviledge!

Their website blurb reads along the lines of being an umbrella company for employees (rather than contractors...). His staff will sign a contract of employment with Compupay (i imagine foreiting any employment rights with my client...), however the contract will state they will be used exclusively by my client. Compupay will then invoice my client for the staff cost (salaries + ER NIC + pension contributions) on a monthly basis.

He claims there will be no fee - Compupay insist they are funded by a "Goverment scheme"... They have also offered 4% of the staffing costs to him, as sort of commision for allowing them to run his payroll!

Obviously the above is throwing red flags left, right and center, along with: the name "Compupay" - searching online results in the large US payroll provider and the UK company website, no reviews, a whole lot of nothing. They also seem to brandish an ACCA and AAT logo on their site, but i can find no record of them being registered with the respective bodies.

A bit more digging shows the company name IAH Services Ltd. Can't find a great deal on them either, other than the Co House info.

So whats going on here? Anyone heard of them? Anyone care to explain this "Goverment Scheme" they speak of? Or am i correct to think that this is an absolutely steaming pile of BS that my client has eaten up?

Thanks for your input.

Replies (21)

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By Accountant A
16th Dec 2019 15:40

If it seems to good to be true, it usually is. I would have thought people running their own business might be aware of that.

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Hallerud at Easter
By DJKL
16th Dec 2019 16:09

Love to see the employee's appointed employment lawyers let loose on this, it sounds appalling and any loyalty his existing staff had to his business will likely be destroyed in any such process.

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Replying to DJKL:
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By JamDon
16th Dec 2019 18:03

Oh I absolutely agree with you. What I can't decide is how the umbrella company generates turnover from this. I must be missing something.

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RLI
By lionofludesch
16th Dec 2019 16:30

Very long bargepole required.

Especially if they're in some sort of VAT-exempt trade.

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By ireallyshouldknowthisbut
16th Dec 2019 16:49

Presumably your client pays the company, who pay the net pays for 3 months or so, hang onto the PAYE, explain any letters from HMRC as an admin error, and do a moonlight flit with the final month's gross?

For 300 employees that would be a lot of lolly.

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Replying to ireallyshouldknowthisbut:
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By JamDon
16th Dec 2019 18:00

Thanks but the employees would be on the umbrella company's PAYE scheme. Therefore the PAYE/NIC/pension liability falls on to them rather than the client.

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By Wanderer
16th Dec 2019 18:08

compupay wrote:
Our unique payroll service means we save up to 10% of your staff costs, that includes any costs for our services. We also take over all legal responsibilities for your staff. In addition, there is an unsecured business loan facility linked to the wages/salaries, if required.
We employ your staff, this means the legal responsibility of auto enrolement, PAYE/NI, employment tribunals is ours NOT yours.
There is no additional fee for our services. Our services are funded by a Government Scheme.
Yep, I'm convinced, what could possibly go wrong?
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Replying to Wanderer:
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By JamDon
16th Dec 2019 19:16

Thanks. Perfect, I'll assure my client that nothing can go wrong... Free money :S

But seriously am I thinking this is much more sophisticated than it actually is... Is it just going to be a case of banging a bogus PAYE ref on payslips, never registering a scheme or making RTI submissions and banking the deducted PAYE and NI?

My initial thoughts were there's going to be an agency fee/deduction written into the employee contract. Or maybe they'll claim the Emp Allowance and charge the client for ER NIC.

Obvs this whole thing is so dodge, I'm just speculating on what the actual scam is.

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Replying to JamDon:
RLI
By lionofludesch
17th Dec 2019 09:51

JamDon wrote:

Thanks. Perfect, I'll assure my client that nothing can go wrong... Free money :S

But seriously am I thinking this is much more sophisticated than it actually is... Is it just going to be a case of banging a bogus PAYE ref on payslips, never registering a scheme or making RTI submissions and banking the deducted PAYE and NI?

My initial thoughts were there's going to be an agency fee/deduction written into the employee contract. Or maybe they'll claim the Emp Allowance and charge the client for ER NIC.

Obvs this whole thing is so dodge, I'm just speculating on what the actual scam is.

Maybe they'll just rethink their pricing structure in six months' time.

Or less.

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By lesley.barnes
17th Dec 2019 10:01

The sceptic in me thinks that this company will operate a payroll and pension scheme, pay nothing over to HMRC or the pension provider and go bust. They will use the PAYE and pension fund deductions to pay their own costs. It takes HMRC so long to catch up with late payers that they could have almost a years worth of funds before they need to go bust. They then set up again and start the whole thing again. I can only find one company on Companies House with a similar name and its accounts are overdue. I wish your client well with this he might turn up to work one day and find he is the only person in the building. His ex employees all being made redundant when the Umbrella Company goes under.

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Replying to lesley.barnes:
RLI
By lionofludesch
17th Dec 2019 10:12

lesley.barnes wrote:
. His ex employees all being made redundant when the Umbrella Company goes under.

Still, at least he'll know where to find replacements.

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Replying to lionofludesch:
Hallerud at Easter
By DJKL
18th Dec 2019 13:00

He would possibly need to employ them under TUPE anyway, the strange and wonderful world where one apparently owes a legal duty to employees of another company that say merely provides one with a service. ( if one inhouses the service)

A friend of mine's family operate a substantial chauffeur drive business, they were in the process of tendering for a new contract until their solicitor made them aware that if they won the contract (I think it was with a local authority) any employees of the previous company holding the contract, who substantially worked on that contract, would then likely have TUPE rights to my friend's business.

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Replying to DJKL:
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By WhichTyler
18th Dec 2019 13:41

Well some one is going to have to do the work aren't they (ie your client would need to take on more staff or at least incur more cost to deliver the contract if they win it)?

And then price the difference between TUPEd staff and their other staff (if TUPE'd is higher) into the bid

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By John R
17th Dec 2019 10:06

Could it be that Compupay keep the employment allowance as their web site suggests that they bill the employer for the gross pay and employers' NI/AE contributions without mentioning the employment allowance?

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By Darren Testeekle
18th Dec 2019 11:15

I have worked with quite a few Umbrella Companies from a compliance perspective and we came across Compupay from a client enquiry. I went on their site and i challenged the business via their "chat " tool . Suffice is to say they did not come up with anything that made me think " ooh this sounds good"! Couldn't locate them on Companies House although their site refers to them as a " special type of Limited Company". I think you already got the "vibe" from everyone that this is not the answer . I could recommend a few decent Umbrella Businesses if you wish but understand if you want to do this independently.

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Replying to Darren Testeekle:
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By JamDon
18th Dec 2019 12:45

Thanks, I was just trying to get a grasp on how these guys are operating (i.e. what's the scam).
Out of interest, what sort of info did they disclose over their chat tool?

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Replying to JamDon:
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By Darren Testeekle
18th Dec 2019 15:53

They didn't come up with anything .....which was sort of the problem. The website has changed a little since i contacted them. They purported to be a member of FCSA (Freelancer & Contractor Services Assoc) , a sort of self governing compliance outfit for Umbrella companies. As it happens i know both the CEO and Chairman of the body and they knew nothing of Compupay being a member when i spoke to them both. The person was evasive and then started saying that they were not qualified to answer my questions on the chat function. I asked about the LTD Co bit but they would be drawn.

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Replying to Darren Testeekle:
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By Darren Testeekle
18th Dec 2019 16:02

And the Gov't Scheme was a mystery as well. I have known of many schemes over the years and most at some point probably said " endorsed by HMRC " or "HMRC Approved". They simply wouldn't do that. At best they had an enquiry where HMRC didn't find anything wrong .....this time.
Unless there is some sort of 3 man LLP scheme or similar where each mini umbrella gets the £3,000 EMP NI allowance ? It has been done before. And they could badge that as a "Gov't scheme" maybe ......but i don't know for sure.

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By lesley.barnes
18th Dec 2019 13:24

When I read the blurb on their site it made me wonder not only how they were generating any money to run their business but how they were able to give 14 days credit and also had funds to loan money to clients 90 days after signing up.

Even more suspicious they are using HMRC money to fund it.

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Replying to lesley.barnes:
RLI
By lionofludesch
18th Dec 2019 13:33

lesley.barnes wrote:

When I read the blurb on their site it made me wonder not only how they were generating any money to run their business but how they were able to give 14 days credit and also had funds to loan money to clients 90 days after signing up.

It's a Government scheme, innit ?

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Replying to lionofludesch:
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By atleastisoundknowledgable...
18th Dec 2019 16:16

TBF they didn’t say ‘government approved scheme’. Withholding PAYE to run your business is a scheme that involves the government, what one might refer to as a ‘government scheme’.

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