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Leaving an Umbrella Company
One of the great things about using an Umbrella Company is that you can leave at pretty much any time without having any ongoing responsibilities. This means that if you decided to return to permanent employment you could do so easily. Contrast this to going into business with your own Contractor Limited Company where you need to file end of year accounts and returns, close the company bank account, notify Companies House and the HM Revenue and Customs that the business is closing etc. With a Contractor Limited Company the admin work (and costs) live on long after you stop billing through the company; you avoid this problem by using an Umbrella Company.Seeing out a Contract
If you are going to leave an umbrella company it is a good idea to do so at the end of a contract rather than half way through an assignment. This way you do not have to deal with two umbrella companies at the same time over contracts, payments, invoices etc not to mention the Agency or Client who will be required to prepare a new contract and validate new Umbrella Company documents. If you leave an umbrella company at the end of a contract there is a clean break.Get a P45
As soon as you leave a PAYE Umbrella Company and a final payment has been made you should receive a P45. A P45 details the amount of income tax that has been deducted in that employment and throughout the tax year to date (if on a cumulative tax code). You will need to hand the P45 to the new employer in order to be put on the correct tax code.Store all Receipts for Business Expenses
If you have used an umbrella company that requires you to keep hold of receipts for business expenses make sure you store them in a safe place for at least 6 years. If you fail to do this and the receipts are requested when the Umbrella Company receives a PAYE Investigation you could find that you are required to pay backdated Income Tax and Class 1 National Insurance payments on the expense.Get an Employment Reference
It’s always a good idea to get an employment reference from the Umbrella Company upon leaving. This reference will not always be able to detail skills or experience but should confirm the dates between which you were employed, your leaving date, that you received salaried income and maybe even the gross amount of pay received. This documentation helps to provide further validation of the fact that all income was taxed as if Inside IR35, therefore IR35 does not apply.It’s also a good idea to get a reference from the client you worked on site at explaining the skills you used and role you played in a contract.
