Fee charged towards Contractor Management System

[alshanky]

I am a contractor working for a financial services firm. The agency that my client employs has made a change to my contract stating the client wants to put in place a contractor management system and is asking each of the contractors to pay for the system. The fee is 0.65% of the contractor's daily rate.

I have the following questions/comments:

- The client has proposed making the amendment to my current contract that runs until 31/03/2021 by reducing my daily rate by 0.65%. There is no mention of 0.65% anywhere on the contract as such only a reduced amount is shown on the contract.
- I find that the charging a daily % is too much to pay for a contractor management system.
- There is no mention of the reduction in the daily rate due to the fee charged for the system
- Will I be able to recover this as a cost to my business? i.e. get Corporation tax benefit and VAT (that may be chargeable) on this
- What will be the implications to IR35 applicability of the current contract?

I would like to know your thoughts / advise please.

Appreciate your feedback.

[cannon999]

Assuming you bill 500/d and 22 days a month this is £11000 a month. 11000 * 0.0065 = £71.5 a month. You are going to quabble over 70 quid a month with your client? Are you stupid?

[ladymuck]

What is the fee meant to cover / provide?

[Old Greg]

Increase your daily rate by 0.75% to cover admin expenses of adapting your processes to their contractor management system.

[oilboil]

Assuming you bill 500/d and 22 days a month this is £11000 a month. 11000 * 0.0065 = £71.5 a month. You are going to quabble over 70 quid a month with your client? Are you stupid?

I would quibble it in an existing contract, in a new contract I'd accept its the cost of taking the business, but for an existing contract with no mention then I'd argue the toss or get them to up my rate by 1% to enable the cut to be taken

[Old Greg]

Assuming you bill 500/d and 22 days a month this is £11000 a month. 11000 * 0.0065 = £71.5 a month. You are going to quabble over 70 quid a month with your client? Are you stupid?

It is the client and agency that are quibbling over this sum. Having said that, I would probably accept the contract change and then hold a grudge forever. Crazy for the agency and client to create this kind of ill will over such a sum for a new system that they should have a business case for - presumably it enables some kind of efficiency benefit.

[northernladuk]

This was quite an interesting post the OP had up until

What will be the implications to IR35 applicability of the current contract?

Why does everything have to come down to IR35 and how come people know so little about IR35 they have to ask everytime something changes? Boils my piss.

This is your livelihood, how come you know so little about IR35 you have to ask? WTF are you going to do next April when you are deemed inside?

How can you work out complex business situations like this when you can't apply the basics of something that's been around 10+ years? So many people pretending to be a contractor it's unreal.

But that aside... Im struggling to understand the situation with the contract. You say they've made a change to your contract. So they've dropped this on you and presented you with a new contract before the old one has expired with the new terms on it? Have they served notice on the old one or what?

I think it's a case of what Old Greg says... but... I'd play the game regarding contracts to the letter. They can't just give you another one and say here sign this. Make sure they give the proper notice on the old one and you'll sign that when the old one has expired. If they want to do this they've got to make sure it's done properly... unless they are and you've just not explained it clearly.

[eek]

What is the fee meant to cover / provide?

It doesn't matter - it's a cost the end client has created that needs to be covered by either the agency or the contractor.

As the agency isn't going to pay it you the contractor will have to pay it.

And if you think this is bad you should see the one I recently got which requested a 3% discount for payment before 90 days on a contract for a upfront payment for a license fee.

So in reality there is nothing you can do when end client throws their weight around - I would just swallow it as the only other option is to find other work.

as for any IR35 impact we won't have a clue except why would you be bringing in a contractor management service before such a big change.

[Fred Bloggs]

What it's called is irrelevant. It's simply a rate cut by another name. The only choices are suck it up, increase your rate or move on. In the present market I suspect the only real choice is suck it up.

[jamesbrown]

presumably it enables some kind of efficiency benefit.

The efficiency benefit is 0.65%.