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Umbrella company with a jsop

Recently asked to unravel an umbrella company payslip

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Anyone had experience of a Joint share ownership plan in relation to an umbrella company.

I was recently asked by a contractor who has been employed by an umbrella company to help her understand her pay. On investigating her payslips and P60 it showed an amount of her weekly invoice value that was being deducted each week before her pay was calculated called ‘Company tax’. The pay after that then included a untaxed amount called ‘Company income’ After speaking to the umbrella company it turns out she is part of a JSOP scheme whereby she owns shares in a company in Ireland and receives a ‘Cash advance’ each week. Although this has not been detailed in any contracts that I have been given as part of this work (now requested). Apparently she is due a share statement and all the tax is dealt with but my concern is she could have a tax liability on this as it sounds very dodgy. I’ve read HMRC notices but none that I have found specifically mention JSOP.

Any tax experts out there that can help?

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24th Jul 2019 09:14

A JSOP in this type of arrangement is usually linked to an Employee Benefit Trust. The cash advance will most likely be regarded as a loan within disguised remuneration/contractor loan scheme arrangements. Lets hope the arrangement commercially stacks up! It would be worth finding out if the scheme is under enquiry, who advised on it and ask your client for all documentation and emails surrounding the sign up.

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to Jerome_Lane
25th Jul 2019 21:04

Thanks for that information. Having calculated the pay under a normal payroll situation it doesn’t really save much. My concern is a line that size ‘Company tax’ which is a balancing figure based on what the contractor was told as a percentage she would be paid. As well as the fact this scheme could potentially leave her liable to pay more tax if it’s not legitimate.

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24th Jul 2019 09:55

Personally I'd probably point out the pitfalls of some of these arrangements and probably refuse to act.

As you have been "asked .. to help her understand her pay" there's a good chance that this could come back and bite you.

From your description it appears that she's gone into this without seeking your advice so you need to be careful to not pick up the responsibility now.

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