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  1. #1

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    Default Losses

    I was advised i would be paid at a higher rate for a weeks work which was at a different destination to my normal contract, all the other people attendind received this same percentage uplift.

    After returning from the week away, I found out that the rate they agreed prior to my departure was not what I received (they basically made up a new rate just for me, to reduce their costs). The client claimed that the decicion had been made before hand, however neither I nor the agency were informed of any changes.

    Should this discrpoency between my invoice and what I received be written off as a loss? Does this benefit me tax-wise?

    How does it work if I am audited, do i need to record proof/evidence that I was advised of this rate or something?

  2. #2

    TripleIronDad

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    How were you advised? Was there a contract?

    Presumably you do not want to damage the relationship? In which case speak to your accountant. It will be written off as a bad debt.
    I keep pushing forwards but they keep pushing me backwards. So I have new rules. 1. Don't feed the trolls you know they have no souls. 2. Don't respond to them they'll only post back back again. 3. Don't be their friend they'll only knife you in the back. I have new rules I count them.

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    Contractor Among Contractors

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    It's not a 'loss'
    It's less than you are owed though, so arguably you can chase for the money.

    As for tax benefit... you have made less profit than you would have, so you pay less tax than you otherwise would have done.

    If you're happy with the situation then issue a credit note against your invoice for the difference and that deals with the discrepancy.

    What did your accountant say?
    Last edited by Lance; 10th August 2017 at 14:36. Reason: grammar

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    TykeLike

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    I guess it comes down to what was actually said and if you had have any proof.

    1) Was any of this in writing?
    2) Was the rate paid the same as your original rate or a third rate above your normal rate but below the one you thought had been agreed?

    If 1 is no then there is not a lot you can do, you have been screwed over by the client (possibly the agent as they might have got an uplift).

    If you were paid your normal rate but invoiced the higher rate I am not sure how it can be classed as a loss, I could bill 10 times what my agreed rate is, but if the client never agreed to it it is not classed as a loss necessarily.

    If you were paid a sightly higher rate than your normal rate, but lower than what you expected there is not a lot you can do in my opinion, it will come down to how much damage to the relationship between you and your client has been made.
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    You have two options, either you can correct the invoice i.e. accept the misunderstanding and agree to the lower rate or you should book it as a bad debt. If it is a bad debt ie an unpaid invoice it should be possible to declare this as uncollectible. You need to talk to your accountant. If you think you won't get paid and it is a misunderstanding I would reissue the invoice so that you don't take a potential hit on the tax at least in the current year.
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    Default

    To clarify, I am not asking for advise on how I can recover this money, purely from a accounting perspective.


    So the agreement was two days travel @ std rate and the 4 days work was supposed to be

    This 27% was referred to as "the uplift" by my manager and in correspondence, specifically because initially i was prevented from going on this trip as they had no mandate to allow contractors to receive this uplift. However, had I not gone the trip would have been cancelled and it would have been very expensive and embarrassing for client.

    So when they realised the outcome, they took it upstairs to more snr staff who greased the wheels and allowed me to travel. I have in writing from a number of employees of the client, all managers and all snr to me, regarding the change and approval to travel and again referring to this as "the uplift". The 15 other employees who travelled also received the same uplift rate, hence "The Uplift".

    Only when I returned and received my lower than expected pay and investigated did they state, I'll paraphrase "oh the uplift, no you dont get that uplift we created a new uplift just for you". This was not communicated to me nor the agency.

    This meant they paid me the 27% but only outside of the hours i would normally work, so about a quarter of what i expected.

    Obvs there is nothing i can do other than coax/cajole or sue. The latter would loose me the contract so I am comfortable that this is one of those things to learn from. No point being angry and out of pocket.

    So basically, this is not me trying to make a fast buck by cooking my books, this is a legitimate situation where I am asking if this discrepancy can be called 'a loss' - I dont really know what a loss and how it benefits to a company to write off losses, so that is what i am interested in...

    Thanks all
    Last edited by MikhailCompo; 10th August 2017 at 15:25.

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    Quote Originally Posted by BlasterBates View Post
    You have two options, either you can correct the invoice i.e. accept the misunderstanding and agree to the lower rate or you should book it as a bad debt. If it is a bad debt ie an unpaid invoice it should be possible to declare this as uncollectible. You need to talk to your accountant. If you think you won't get paid and it is a misunderstanding I would reissue the invoice so that you don't take a potential hit on the tax at least in the current year.
    Or start dunning.
    Where there's muck there's brass.

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    Quote Originally Posted by northernladyuk View Post
    Or start dunning.
    whats dunning?

    Is it like a P45 script, that all IT contractors have ready and waiting in case they get shat on, they can run and then leg it?

    Lets hope it self-deletes so i'm insured huh!

  9. #9

    Prof Cunning @ Oxford Uni

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    Quote Originally Posted by MikhailCompo View Post
    whats dunning?
    https://en.m.wikipedia.org/wiki/Dunning_(process)
    Strong and Stable Moderation

  10. #10

    Prof Cunning @ Oxford Uni

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    I'm trying to read what you've written...
    Did you get paid extra for being away from home?
    Did they cover your expenses?
    What is this 27% you say you got - what is it supposed to be for?
    Did you get paid your standard daily (or hourly) rate while you were away?
    Did you receive extra money as well, if so, what was it for?
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