Umbrella Companies

Umbrella Companies may cash in big from the recent BBC freelancer scandal. The Public Accounts Committee published a new report yesterday. It showed that the BBC had hired 1,500 people who operated through Personal Services Companies. The Chairman, Margaret Hodge, called this offensive. She said that the BBC had hired 1,500 people this way. She said that the BBC could provide no evidence to show that these freelancers had paid their proper taxes.

That’s a completely new concept. It has never been the case before that one company has to show that a supplier company has paid its taxes before doing business with it. The Public Accounts Committee calls these freelancers “off-payroll engagees”. George Orwell would have had a field day with that phrase. Why not call them contractors or freelancers. It shows a bad attitude to freelancers.

The Government is sure to want to take action over this. It seems no surprise that it was front page on both the Daily Telegraph and Daily Mail, These are two of the Conservative Party’s main backers. Expect new rules from the government to shackle these ‘tax avoiding’ freelancers (or off-payroll engagees if you will). However, what is bad news for the BBC’s freelancers may be good news for Umbrella Companies.

If the Government impose the same rules on the BBC as with their own departments it may cause freelancers to opt for brollies instead. The other options is to go permanent. Contractors won’t like that. Indeed it could be bonanza time for Umbrella Companies. The BBC is not going to want to make all those freelancers permanent members of staff. That gives them no flexibility. Therefore brollies could provide a good solution for them. They can still use contractors. However, these would be through brollies rather than via Limited Companies.