One good example is the UK model, where there are no direct regulatory agencies for these companies.  But tax authorities do pay attention to these entities and contractors to make sure they are not tax avoidance schemes.    Umbrella companies in the UK can be structured in a variety of ways – the term applies to virtually any company which handles payment for contractors, meaning these companies may operate a simple PAYE structure they may supplement this with expense processing or dispensations.   All compliant umbrella companies pay their contractors as PAYE (Pay as you Earn) employees for a large portion of their earnings. They invoice the clients/recruitment companies and then process contractors through PAYE. Contractors are often able to offset their taxable income by claiming legitimate business expenses.