|
|
Below are some of the common misconceptions contractors have about umbrella companies:
1
2
3
4
| Myth 1:
Certain umbrella companies have a special HM Revenue & Customs dispensation which means that their contractors can claim more expenses, without receipts.
Fact:
A dispensation only relieves an umbrella company from certain specific Revenue reporting requirements.
In fact, some dispensations can create a disadvantage as the umbrella company imposes a limit on the amount of expenses (or circumstances in which) you can claim, which maybe less than the amount you have actually spent. Also, most umbrella companies with dispensations, do not allow you to re-claim any VAT.
With iBalance you can reclaim the full cost of any VAT.
It is generally considered good practice to keep all receipts to comply with HM Revenue & Customs requirements.
Below is an extract from the Professional Contractors' Group "Guide to Freelancing" which urges caution on this matter:
"
There is nothing 'magic' about an umbrella company's PAYE as opposed to any other company's PAYE - it operates in precisely the same way. ...you cannot artificially inflate those expenses according to dispensation limits. PCG would strongly urge those freelancers operating through umbrella companies to ensure that their records are correct and in particular that they are deducting the correct amount of expenditure in tax calculations.
"
|
|
|
