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Umbrella companies

John Chaplin and Rob Woodward (BDO) explain the main tax consequences associated with the use of umbrella company structures. 

An umbrella company is a type of entity that is usually associated with employing workers for the onward supply to clients. This article sets out a working definition of umbrella companies and looks at the main tax consequences of umbrella company structures.

What is an umbrella company?

The term ‘umbrella company’ is not defined in legislation and consequently can mean different things to different people. It is therefore important to understand which precise model any particular company is operating.

At its base level there are essentially three types of operation which could be considered an umbrella company:

(a) an employer of a worker who provides services to a third party under the terms of an agreement between the employer umbrella company and either that third party or...

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