Any accountants out there - query re umbrella companies

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Hi,

Wondering if anyone knows what the position is with Umbrella companies. I did loads of work for a co in 15/16 tax year, invoiced in January and company paid umbrella company in Jan who the didn't release money until mid April so hit my account in 16/17 tax year. Is going to really screw me over if I can't put it in the 15/16 tax year and seems really unfair when that's when I did the work and essentially got paid for it as the co. had sent the money to the umbrella co. If anyone does know, would be much appreciated.

what is to stop you accounting for it in 15/16 and marking it as a debtor?
cash accounting is not compulsory after all

Agree with talkin. You should account for it when you did the work and raised the invoice - payment timing is irrelevant.

I assume they're an employee of the umbrella rather than having their own limited company, so the payment date will determine which tax year it falls into as it's payroll.

There used to be a way of getting HMRC to reallocate payroll into a different tax year but I don't know if it still exists. Probably best to phone HMRC and ask them to see if it's still possible.

Thanks everyone. Bradabuuny that's right I'm on PAYE with the umbrella company as I'm not a limited company. Am classed as self employed with HMRC as do other work not through an Umbrella Co. No-one at Umbrella co. seems to have proper accounting knowledge so just say the payment date is what counts, although the paperwork all says it is in a payment period up to Jan 22. I spoke to HMRC and they said I needed to talk to Umbrella, but I'll try again next week. Am so frustrated as trying to get a mortgage and it will make it look like I earned way less in 15/16 than I did and push me into a different tax band if I have to put it into 16/17. It just seems wrong that six months work for 15/16 will have to get pushed into 16/17 all because the umbrella didn't release the money to me although they had it.

If our self-employed, you complete a tax return and should be able to adjust the income, I would have thought/

but even with payroll, pay periods count ....
I've had PAYE pay me after date but the deemed period was the one to which it applied
if the umbrella does not even give you that advantage I wonder whet the fees are worth

It could be that the OP doesn't have much choice about whether she uses the umbrella company. Work in many industries like construction and supply teaching is almost all available via a myriad of agencies and umbrella companies, who exist only to cream off a big chunk of the money earned by the poor sods forced to work this way. Don't play the game and you don't get any work.

The OPs situation is utterly frustrating and so unfair but unless they are willing to reissue her P60 for 2015/16 with the income in question included, theres probably not a lot she can do unfortunately.

Talkin peace, that is my argument with them - surely payment period takes precedence over transaction date.

BarbaraofSeville - you're right I don't have a choice but to go with the umbrella co, for this contract - unless I set up as a limited co. I researched that today.

Spent a lot of the day arguing with Umbrella co. as well. Part of the problem I think is it's all a lot of very young people with no proper accountancy truing so they don't really get what I 'm saying. They insist that the transaction date is what counts at it corresponds to when I did the work. I didn't do the work in April though, I did it in October, November and December of 2015 and no matter how often I say it they won't acknowledge it. It is all so frustrating. Interstingly though I don't think they actually issued me with a P60 for 15/16 - I wonder if that's because I', still working for them in 16/17?

not issuing a P60 is a serious offence .... threaten to report them to HMRC

Thanks talkin I'll have to check stuff, I expect they have, but in a way I'm now hoping the haven't!

You are supposed to get a p60 every tax year even if you still work there. I've worked for one employer for nearly 25 years and get one every year.