Director Umbrella compliance – An Update
As the previous article ‘Director Umbrella Solutions’ has mentioned, people who join Director Umbrella Structures as individual contractors are highly popular in the local Irish market. This structure gives self-employed people a quick and easy way to start their contracting experience as well as having a comprehensive accounting solution.
However, there are some hidden threats that contractors should be aware of before making the decision to join this type of umbrella company. Under this structure, the individual contractor is appointed a director and has several responsibilities under The Companies Act 2014. However, in reality, they exercise no control or power on the company’s daily operation and decision-making process and therefore the contractor cannot fulfil their responsibilities under the act. Moreover, individual contractors may face tax compliance issues such as under paid tax liability and penalties if they use these structures. A review by an independent Auditor confirms that the Director Umbrella Company structure is not suitable for people who want to contract in the Irish market. This structure is not compliant with Irish accounting or corporate governance standards. Moreover, revenue is now actively examining the Director Umbrella structure and next steps are expected soon.
Therefore, people who want to become self-employed are suggested to establish a Personal Limited Company for their best interest. This type of self-employed structure enables the owner to hold full control over daily operations as well as all decision making. From a tax perspective, the owner could enjoy better tax benefits as limited companies can receive greater tax relief to fund a pension (Executive pensions). The other compliant option is the PAYE Umbrella option, which we have discussed in other articles on our website.
In conclusion, being self-employed is a better option for individuals who are searching for greater flexibility and control. Instead of bearing the hidden threat of a Director Umbrella company, establishing a personal limited company, or using a PAYE Umbrella service are the most suitable options to start up a new business. If you are interested in such a structure get in touch with Accounting Pro Ireland and we can find the best options for you. Furthermore, if you as a contractor or agency that have used a Director Umbrella service and need advice, we will be happy to provide advice to you.
Accounting Pro is Ireland’s premier contractor accounting service. We are here to help the busy contractor and company, with all your accounting and payroll needs. We are both an umbrella company and umbrella corporation and we can create your limited company. We are experts in contractor pensions, contractor health insurance, illness and sick benefit for the self employed and contractor expenses. To learn more about what we do please review http://accounting-pro.ie/ and contact us by email: firstname.lastname@example.org or phone us (01) 582 5405. “Director Umbrella compliance – An Update” is an article written by Accounting-Pro Ireland for the benefit of everyone. Feel free to share it but please give attribution on a CC BY-SA license.