Nixon Williams

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Contractors warned due diligence vital as two umbrella companies go into liquidation

Contractors must ensure they complete thorough due diligence on all their contracting service providers, warns ContractorCalculator CEO Dave Chaplin, following the news that two umbrella firms – Sunday Solutions and Bradbury & Co – have gone into liquidation.

According to the Insolvency Service, an estimated £80m was handled by the Sunday Solutions scheme on behalf of 1,500 contractors, many of whom did not have their tax liabilities paid. Because the scheme offered contractors membership of a partnership, those contractors remain liable for the unpaid tax, even though they thought the sums had already been paid.

“This case shows it really is essential for contractors to background check all their service providers before they sign up,” urges Chaplin. “Using free resources such as ContractorCalculator’s Umbrella Checklist, contractors can avoid being left to pick up the bill when providers either go into liquidation due to cashflow or other management issues, or when less scrupulous firms charge excessive fees, provide poor service and then flee their responsibilities.”

Commenting on the Sunday Solutions Scheme case, Insolvency Service Investigations Supervisor Chris Mayhew adds: “Anyone considering using an umbrella tax scheme needs to be confident that they are using a reputable company.”

“With us facing public sector job cuts and an uncertain economy, more first-time contractors than ever are likely to be entering the contracting marketplace,” continues Chaplin. “Choosing a compliant umbrella service provider right from the start means contractors are reducing their risks and are unlikely to ever fall behind in their tax liabilities.”

  • “The action taken in this matter sends a clear message,” concludes Mayhew. “If you run a company that adopts unscrupulous business practices, we will investigate and where necessary take action to close them down.”

Published: 30 December 2010

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