My umbrellla company and agency can’t agree – now I am hit

My Umbrella Company
My Umbrella Company

My Umbrella Company and Agency

A reader sent in this article about My Umbrella Company and Agency Disagreeing.

I recently got an offer of a contract through one of the major agencies.

They refuse to do business with my umbrella company because they won‘t sign their Compliance Letter.

I’ve been outside IR35 since its outset and have been using this IR35 solution without any comeback. I’ve enclosed, therefore, the Compliance Letter.

Compliance Letter

Re: [Individual Contractor‘s Name]
[Umbrella Company Name]

We understand that the above person is to supply his/her IT contractor services through the above company which we understand you manage and control.

So, we would be grateful if you could just confirm the following:

Confirm Company Name

1. The above company is registered in the UK.

2. The above person is an employee of the above company.

3. The whole of the income paid to the above company in respect of that contractor‘s services shall therefore be subject to deduction of income tax and national insurance less Inland Revenue approved expenses.

4. You will make no dividend payment, therefore, to the above person.

5. All monies will be paid to the above company‘s bank account based in the UK.
So, we would be grateful if you could state your confirmation by signing where indicated below.

HMRC Request Copy of Letter

Please note that HMRC may request a copy of this letter and that in signing below you also hereby consent to HMRC being given a copy of this letter as and when requested by HMRC.

— Point 4 says ‘no dividend payments’. Can agencies do this?

IT Contractor Comment

If any readers can shed some light on the above, so it in the comments section below.

Agencies don’t usually like to chuck away money making opportunities.

This one seems a bit officious.

Perhaps they are being over cautious.

What do you think?