It is a company that is already in existence, ready for a contractor to use. Essentially the contractor carries out their work and the Umbrella Company will issue invoices and collect payments on their behalf, ensuring they are maximising any allowable tax deductions and expenses along the way too. Contractors can be set up immediately within an Umbrella Company and start using it straight away – as the recruiter you will receive an agency pack the same day they sign up with all the relevant paperwork to finalise their contract.
As soon as they are finished contracting, they can simply leave the Umbrella Company. It is a straightforward, pay-as-you-go service.