Agency charging for payments to be made to my ltd company

[MichaelF]

Hi,

I am the owner and sole shareholder of a ltd company that works in Engineering. I have recently started a new contract where I have been engaged through an agency to provide services to a client. My company is considered outside of IR35.

I have just signed the contract with this agency and completed my first day of work yesterday. I have received an email from the agency this morning asking what frequency I would like to be paid on, as the payroll company they contract their payroll out to will charge me £16 off my invoice for each time I am paid. My questions is is this legal? I would have thought the fact they don't have the capability to run their own payroll, and as such contract it out to others would be their financial responsibility. Why should I have to pay for this?

If this is illegal could you please point me in the way of the legislation concerning this so I can get back to them.

Thanks very much for any assistance you can provide.

Regards,

Michael

[VillageContractor]

Have you checked your contract to see if that's mentioned? If not, it doesn't sound legal

[MichaelF]

Have you checked your contract to see if that's mentioned? If not, it doesn't sound legal

It's definitely not mentioned. It's a standard NEC professional services contract. I've been looking online but can't seem to find much information regarding this (assuming because you think it would just go without saying.... paying to be paid! ridiculous), is there anywhere you can point me to look?

[uk contractor]

Happens in building & construction all the time (they deduct their admin expense on the payroll as a noted item on the wage slip) so should imagine its the same for engineering. Not sure if its entirely legal or not but its quite a common practice probably need to speak to a lawyer but it will be somewhere in your contract small print usually as agents will employ lawyers to ensure the contract is valid! Also in IT contracting its quite common if you want a speedy same day money transfer to have to pay £30 per transfer. Some agencies do it for nothing (depending on who they bank with) but many charge extra for same day cleared funds as they have to pass the cost on.

[mudskipper]

This doesn't sound right. Might be worth checking that they are expecting a B2B transaction, not running payroll.

Also, as a note, it's not your company that is outside IR35, it is your engagement with this particular client - each engagement needs to be separately assessed.

[eek]

This doesn't sound right. Might be worth checking that they are expecting a B2B transaction, not running payroll.

Also, as a note, it's not your company that is outside IR35, it is your engagement with this particular client - each engagement needs to be separately assessed.

Sounds right to me. Remember one of the things I've been told to expect to see from the Taylor report is that agencies will need to offer a fee free payment option....

[m0n1k3r]

Happens in building & construction all the time (they deduct their admin expense on the payroll as a noted item on the wage slip) so should imagine its the same for engineering. Not sure if its entirely legal or not but its quite a common practice probably need to speak to a lawyer but it will be somewhere in your contract small print usually as agents will employ lawyers to ensure the contract is valid! Also in IT contracting its quite common if you want a speedy same day money transfer to have to pay £30 per transfer. Some agencies do it for nothing (depending on who they bank with) but many charge extra for same day cleared funds as they have to pass the cost on.

It depends. CIS contractors tend to deduct a small percentage for CIS verification and administration and public liability insurance cover (because most construction subcontractors, usually self-employed, don't have any sort of insurance cover).

I am however to some extent involved in a CIS contractor that employs a number of H&S specialists and also engages a number of H&S (self-employed) subcontractors. When it invoices the main CIS contractor, there is no deduction, and it itself doesn't deduct anything when paying its subcontractors either.

Outside of construction, some agencies charge a fee if you want quick payment (to pay for factoring fees), or else you'd have to wait until they gets paid by their client (e.g. no factoring).