Stricter IR35 rules mean that many limited company contractors are looking to switch to an umbrella working model.

Joining an umbrella company means that you pay tax at the same level as an ‘inside IR35’ limited company contractor, while also benefiting from holiday and sick pay entitlement.

When you choose an umbrella company, it’s imperative that you choose a compliant provider. Not doing your research at an early stage could cost you in the long run.

Umbrella compliance has hit headlines recently after HMRC warned contractors about a number of schemes offering higher than average rates of take home pay.

These schemes are often set up in a way that looks legitimate and, in some cases, they are actively promoted by employment agencies and online umbrella comparison tools.

Usually, however, these kinds of schemes are unlawful and once the tax authority catches wind, it’s the contractors that are forced to pay up.

So how do you know if an umbrella company is going to be HMRC compliant and not cheat its customers? The best way is to look at the professional accreditations held by a company.

Look for accreditations

There are a number of professional organisations set up to enforce standards in the umbrella company universe.

Each of these bodies has their own code of conduct that member companies sign up to. If a company fails to live up to these standards then the accreditation can be withdrawn.

Some of the most important accreditations for umbrella companies include:

• FCSA

FCSA accreditation is recognised as the umbrella industry’s compliance gold standard. FCSA accreditation is awarded to umbrella employers that can demonstrate the highest industry standards and Accredited Members must undergo an annual compliance check from a panel of independent accountants and legal professionals.

Check the FCSA Members Directory.

• ASPCo

ASPCo is a body that represents excellence in the professional recruitment industry more broadly. All ASPCo members are committed to a strict Code of Conduct that demands the highest levels of professional behaviour. ASPCo has also introduced an additional level of compliance in some sectors where greater protection is required. This includes the umbrella sector, where organisations are committed to upholding additional standards through the Trusted Partner scheme.

Check the ASPCo Umbrella Company Trusted Partner Directory.

What accreditations does Umbrella.co.uk hold?

Umbrella.co.uk holds both FCSA accreditation and ASPCo Umbrella Company Trusted Partner status. These accreditations reflect the company’s high compliance standards.

In addition to holding FCSA membership accreditation, Umbrella.co.uk CEO Nick Holmes also sits on the board of the FCSA.

Nick said: “With all the IR35 changes, umbrella companies are understandably under the spotlight at the moment. It’s absolutely vital that contractors can trust umbrella companies and the professional accreditations play an important part in that.

“Apart from doing your research and checking with the major accreditation bodies, my main advice to any contractors would be to remember that if something looks too good to be true - then it probably is.”

For more information on umbrella company compliance, speak to a member of the Umbrella.co.uk team. Call: 0800 121 6513.