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Q&A: Protecting Contractors from Umbrella Company Abuses and Opaque Rates

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The Freelance Informer is concerned about the risks contractors face from tax avoidance schemes within some umbrella companies and the complications caused by non-transparent assignment rates. We spoke to Ray Walker, Worksome‘s VP of Contingent Workforce and regulatory expert, to get his insights.

Q: Contractors are worried about being forced into umbrella companies with shady practices. What are hiring companies doing to protect them?

Ray Walker: Unfortunately, most companies aren’t doing enough. They might be unaware of the issue, hoping to avoid responsibility, or simply not taking it seriously. This growing problem highlights why I advocate for government regulation in the umbrella company industry. It wouldn’t be easy, but it’s essential to clear out bad actors and ensure contractor safety.

Q: How can the use of misleading assignment rates be addressed?

Ray Walker: Ideally, the government would remove employer costs from advertised rates, as other countries do. This would make contracting more transparent for everyone. But for now, the best tool available is the Key Information Document (KID). This document, provided before signing any agreement, should clearly show the gross salary rate. However, many contractors overlook it. Highlighting the KID’s importance to clients and supply chain partners could significantly help.

Knowledge is your best asset. Stay informed to protect yourself as a contractor.

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Disclaimer: This article is for informational purposes only and should not be construed as professional advice. Always consult with qualified professionals for specific guidance.

Do you have further questions or concerns about umbrella companies or assignment rates? We encourage open and informative discussion on these important topics. Share them in the comments below.

Related articles

Apprentice levy fraud: it’s costing taxpayers millions – Freelance Informer

Tax Non-Compliance in the Umbrella Market: What Workers Need to Know – Freelance Informer

Assignment rate unravelled: questions to ask before you accept an off-payroll job – Freelance Informer

1 Comment
  1. Gavin says

    I have long felt that this Apprentice Levy was being incorrectly applied. I need to ask one simple question to clarify for the avoidance of doubt: If contracting inside IR35, should the umbrella company settle assume full financial ownership of the Apprentice Levy therefore the contractor does not require paying it from their day rate?

    If the answer is ‘yes the umbrella company must make their own provisions for this based on their payroll turnover criteria and the underlying contractor does not require having this charge/cost deducted from their rate. If this is the case then I believe that I require a backdated sum of money going back to April 2020, returned to myself as the umbrella company that was used did indeed deduct for many many months an AL charge. Can someone help run a quick audit to ensure accuracy of potential claim? My invoices (many of them) report an AL charge against me and the value is declared.

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