The directors present the strategic report for the year ended 31 July 2024.
UmbrellCo Limited T/A Umbrella Company UK are an Umbrella Employment solution for contractors in a variety of industries.
Operating from one head office in Potters Bar. The staff are broken up into 4 main areas, Payroll, Contractor Finance, Compliance and Onboarding, with Onboarding recently created this year to assist further with explaining the detail of the Umbrella processes. The staff within these 4 areas service over 400 contractors with the majority of staff within the Payroll department.
The reason the staff of the company work predominantly in payroll is because it has been built with a focus on customer service, ensuring that our contractors are paid as efficiently as possible as we run multiple payrolls every day of the week to deliver a service that cannot be bettered.
As a company we have implemented sophisticated analytics to automate detection of any anomalies as well as assist the management to run the services on a day to day basis. By doing so and syncing this with our payroll software it has enabled us to become more efficient and also remove risks that are common with processing large sums of money on a daily basis.
Markets and Trends
With the IR35 off payroll reforms predicted to stay permanent, Umbrella plays a huge part in the contractor market due to the fact that contractors will still need a way of being paid and all taxes accounted for. There have been calls for governance of the Umbrella industry which we would more than welcome as we are operating a very transparent services and do feel that there are others in the market who do not and this should not be accepted.
Growth
For this financial year we have not seen any growth within the company.
Looking ahead, we are looking for a combination of quality and quantity to see the correct trajectory of growth for the company.
The company has a fantastic foundation of systems, processes and personnel in place in order to achieve the required growth and we will be recruiting in the next year with growth and expansion in mind.
For any umbrella company, including Umbrella Company UK the assessment of risk is of the utmost importance due to the nature of the company. The company needs to be fully compliant with employment law as well as having security in place due to the amounts of money coming in and out of the company and current checks and balances taking place on an extremely frequent basis.
As a company the board is fully responsible for the risk management including both a Compliance Director and an Operations Director. As a company we have a 3 point risk management process where all risk is identified, assessed and actioned accordingly.
Identifying Risk – We promote all staff to bring risks and issues to the attention of the board, however there are 4 main areas where we have people in place to identify risk, namely Compliance, Finance, Operations and Industry/Market. Any risks that are identified are brought to the bi-weekly Company Direction Meeting to be assessed if an assessment is required. If they have been identified and the individual responsible for that area has already assessed and actioned accordingly then the review of the risk is still brought to the meeting to inform the rest of the board of the risk, assessment and action that took place.
Risk Assessment – Once risks have been identified the board will assess the risk, led by the individual in which area the risk has been identified. As a company we are extremely risk adverse so it is very rare that no action would be taken when identifying risk. It is also important to us to not only action this risk identified but look at how the attributes of this risk could potentially be found in other areas also. It is important to learn from every one of these instances.
Risk Action – Any actions identified by the board are agreed and the assigned to the relevant lead person to complete. These are reviewed until the action has been completed and then feedback provided to the board on the success of the actions.
Ongoing risks
The company has identified and has appropriate protections is place for the following risks:
Compliance – Employment Law
Any changes in employment law will have an impact on us as a company and we need to ensure that we are able to adapt with any changes. We have a Compliance Director in place to ensure they feed back any pending employment law changes and we have an external Employment Consultant and an Employment Lawyer to do the same so that if any of them miss anything there are two back up sources
Compliance – Right To Work
Any contractor who is employed by the company and does not have the right to work in the UK can lead to a penalty of up to £20,000 per worker. Our workflows do not allow anyone to be paid without Right to Work proof. There are also two methods of verifying right to work
Compliance – Regulator Changes
Being accredited by FCSA we need to keep up to date with any changes. A yearly audit ensures that we are reviewing our processes on a regular basis and with a communication structure in place with FCSA any changes throughout the year are provided with time to implement
Finance - Cash flow
The company itself receives a high quantity of transactions and although the individual values are not necessarily large, they aggregate to millions. Likewise thousands of transactions go out of the company on a monthly basis as well whilst all liabilities needing to be covered. A negative cash flow would affect the company to the highest severity and could even cause the company to no longer trade. The cash flow forecast is part of the regular forecasting performed by the finance team with weekly, monthly and annual cash flows continuously monitored.
Finance – Liabilities
Overdue liabilities with HMRC could result in significant fines and penalties due to the size of the company and its liabilities. It is critical that we do not have late payment of liabilities for our external relationships. Multiple members of the finance team are responsible for the payments of liabilities meaning that should one staff member be unable to there are multiple other staff who will ensure payments are made.
Operations – Human Error
With any company and operations there is always an element of human error and because in an umbrella
company human error can lead to incorrect tax or underpaid contractors it is vitally important to review this. We have significant reporting which not only alerts us when certain abnormal criteria is met but there are weekly reports that are commented on and reviewed so that should any error be identified that it is remedied within 7 days.
Operations – Data Protection
The data protection regulations including GDPR must be met as an ICO registered company. As a company we need to ensure that we are keeping the personal data of our contractors secure. Regular training is provided to all of our staff as well as policies provided. We have a legal team to deal with and monitor any breaches and liaise with the ICO where necessary. Our systems provide security and controls for data protection also.
Infrastructure – Cyber Security
Cyber Security is one of the largest threats to the contractor industry as a whole. As an Umbrella company we process millions of pounds on a daily basis and therefore can be prime for being attacked. The due diligence that is undertaken with every company we deal with is essential but on top of this, monitoring attack attempts and adjusting Cyber Security configurations based on attempts is critical to the business, its workers and business partners.
Industry/Market - Legislation
Legislation changes can impact the company in both a positive or negative way. Either way they could result in an overhaul of processes or a large influx or loss of contractors at once, both of which carry risk. With legislation changes usually being confirmed via the budget each year we have a team responsible for throughout the year keeping up with the potential budget changes and then a board review of all budget changes post budget announcement.
Key performance indicators used include contractor margin, gross profit and other financial performance measures. Not financial key performance indicators include compliance, customer satisfaction and number of contractors.
Umbrellco UK Limited is a subsidiary of Darbayne Group Limited. The entire share capital of Darbayne Group Limited was sold to Magi Group Limited in October 2024. Subsequent to this the entire share capital of Magi Group Limited was sold to Omnia Payroll Limited. This change has not impacted underlying operations.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 July 2024.
The results for the year are set out on page 10.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
In accordance with the company's articles, a resolution proposing that Knowles Warwick Audit Services Limited be reappointed as auditor of the company will be put at a General Meeting.
As the company has not consumed more than 40,000 kWh of energy in this reporting period, it qualifies as a low energy user under these regulations and is not required to report on its emissions, energy consumption or energy efficiency activities.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law, the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period.
In preparing these financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
We have audited the financial statements of Umbrellco UK Ltd (the 'company') for the year ended 31 July 2024 which comprise the profit and loss account, the statement of comprehensive income, the balance sheet, the statement of changes in equity and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
Basis for opinion
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
We assessed the susceptibility of the company’s financial statements to material misstatement, including how fraud might occur, by;
Making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud; and
Considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations.
In response to the risk of revenue recognition, we;
Performed analytical procedures to identify unusual transactions; and
Performed detailed substantive testing across all revenue streams
In response to the risk of fraud through management bias and override of controls, we:
Performed analytical procedures to identify unusual transactions;
Assessed whether judgements and assumptions made in determining the accounting estimates were indicative of potential bias; and
Investigated the rationale behind significant or unusual transactions.
In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:
Agreeing financial statement disclosures to underlying supporting documentation
Enquiring of management as to actual and potential litigation and claims; and
Reviewing correspondence with HMRC and other relevant parties.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Umbrellco UK Ltd is a private company limited by shares incorporated in England and Wales. The registered office is Suite G, Hollies House, 230 High Street, Potters Bar, Herefordshire, EN6 5BL.
The current year financial statements relates to the 12 month period to 31 July 2024, however the prior year was relating to the 18 month period to 31 July 2023, to note when comparing the comparative period of accounts. This was to allow all the group companies to have the same year end, for ease of use of the accounts, within the business and for stakeholders.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues: Interest income/expense and net gains/losses for financial instruments not measured at fair value; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 26 ‘Share based Payment’: Share-based payment expense charged to profit or loss, reconciliation of opening and closing number and weighted average exercise price of share options, how the fair value of options granted was measured, measurement and carrying amount of liabilities for cash-settled share-based payments, explanation of modifications to arrangements;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The financial statements of the company are consolidated in the financial statements of Darbayne Group Limited. These consolidated financial statements are available from its registered office Suite G, Hollies House, 230 High Street, Potters Bar, Herefordshire, EN6 5BL.
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
The average monthly number of persons (including directors) employed by the company during the year was:
Their aggregate remuneration comprised:
From 1 April 2023 the effective tax rate increased from 19% to 25% following an increase in the corporation tax rate.
The actual charge for the year can be reconciled to the expected charge/(credit) for the year based on the profit or loss and the standard rate of tax as follows:
The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.
The following amounts were outstanding at the reporting end date. The amounts were interest free and repayable upon demand: