Agency will not permit dividend method of payment

[simes]

My lady is a contractor she has just been offered a contract with a mobile company through Axel Man, and she has been told, and I quote;

'We can't offer you this contract unless you agree to pay yourself in a method that does not involve dividends.'

So in effect, she can't use a Ltd co., and she can't go through an umbrella co that uses this method of payment.

Not only this, but she contacted her current umbrella co and they said that this is a practice lead by the IR, forcing a growing number of agencies to pass this along to the contractor.

I was mildly amazed by this and I am wondering whether she has this entirely A about F.

Has anyone else heard of this, or experienced a similarly veiled ransom from an agency?

This appears to be some quasi temp type deal with zero benefit to the contractor. The end client doesn't care, why should the agency?

Yours, confused.

[cojak]

Wow - this is a new one. I can't see how any agency can enforce this as they don't have access to our accounts in the same way that an umbrella does.

Does it say anything about this in her T&C's? They may be just trying it on...

I think a lot of us would like an accountant's view on this...

[simes]

Hi,

She is currently working at the old contract - just sorting the new one, so she hasn't seen either the T&Cs or just how they can be enforced.

I asked the precise same question, how can it be enforced? She reckoned that Axel would be asking for signed documentation from the Umbrella that this was the payment method used. But it seems an infringement on business liberties (if such a term exists) I asked this in case she said yes to the method and then did her own thing.

But she is with Filetravel (with whom she is very happy) and they confirmed they have experienced a few of these terms being enforced - just how, they either didn't say or she didn't find out.

If all this is true, it would appear to be similar to the accountants having the current rules by which they can work out tax avoidance for their clients, but that now, all schemes first have to be approved (or cynically, rejected) before they can be applied.

As you say, an accountants' or agents' view on this please.

Cheers.

[Mailman]

That sounds pretty crap. How you run your business is up to you...not an agent.

I would seek legal advice as well.

Mailman

[Rebecca Loos]

That sounds pretty crap. How you run your business is up to you...not an agent.

I would seek legal advice as well.

Mailman

Can't see any need for legal advice. I just can't see how it can be enforced.

You can always tell the agency, that, OK, you will not be paid by dividends. Even if you are. Make sure your umbrella does not give the agency any details as to their payments to you (surely business confidentiality is a good enough reason?)

So yes you have lied to the agency but as it is none of their business, you are perfectly entitled to lie to them, I'd say.

[Mailman]

Actually...considering agents lie daily to contractors over things like their cut...then I dont see any problems with lieing to them.

Mailman

[privateeye]

Agency will not permit dividend method of payment

I would do some checking on the agent, sounds like they are trying something on. Are they going to levy a charge for running PAYE for you, or are they trying to earn commission by stating a preferred Umbrella for you.

They do not sound like they know how a business operates - are they new to the recruitment game or fly-by-nighters.

I am sure it is not an IR rule, it is the agents.

[simes]

Well, the agency has been around for ages - it's just, if I have got this wrong, then I won't have libelised their name.

Play with the letters of the name to see who we're talking about.

But as before, her current umbrella has some other agencies doing the same. How, I have yet to find out. But yes, if the agent is going to enforce that, then I suggested she should ask for holiday pay, sick pay, pension, compassionate leave and all the other benefits of a temp agency.

[Not So Wise]

If it's not in the contract you sign with the agency then you have nothing to worry about

If it is in the contract then it really depends on the wording. If they have the wording right then in theory it could be enforceable (seen things like this on high level finance contracts) but really even if it is not enforceable i seriously doubt you could ever argue you were not inside IR35 if you get examined

My advise is just nod and agree to everything till you have a copy of the contract in front of you (and don't start work till you do) if it is in the contract then argue it, if they will not take it out then just tell them to go to hell and tell the client direct why you are not accepting the contract.

[simes]

Yup,

Well this is what she has done, taken the other contract and informed the problem one why she's not taking it.

But it is still a concerning thing if it is becoming more widespread - any accountants or agents out there that have come across this??