Agent Double Checking if I am the "Sole Fee Earner"

[Bodger]

Hi All,

Contract is being extended, and I just had the following email through from the agency. For reference, original engagement was assessed as outside IR35 by the client - using the Kingbridge Assessment Tool. LtdCo is owned 50/50 by myself and my wife.

"I am putting through the extension to your contract and have been asked by our tax team to check some details with you as you are not the only director of your company.

Could you confirm that you are the ‘sole fee earner’ of the Ltd Company.

We need this confirmation for our IR35 compliance."

Not sure why they would want or need to confirm this. It's tingling my spidey sense that a change in determination may be on the horizon, or...something else? Or just standard agency paperwork?

Has anyone got any insights as to why they would ask?

[Andy Hallett]

Gut feel is it isn't anything to worry about. Back in the day we always used to check that the worker doing the work for a Personal Service Company was a Personal With Significant Control. We changed this after the demise of composite companies caused be 2007 Finance Act.

[northernladuk]

I wouldn't take any notice of the IR35 bit. They may do it under their process of IR35 checking but as usual they've got it wrong and nothing to do with IR35.

It's pretty common for agents to check this and many won't deal with you if you aren't the majority shareholder. We've got posts as far back as 2016 from contractors bumping in to this.

I might not have the full picture but the best idea as to why they do this we could come up with is the potential that the controlling person isn't signing the contract and not being majority shareholder you are not in charge of what the company might do going forward.

[Fred Bloggs]

Really, it's none of the agencies business?

[eek]

Really, it's none of the agencies business?

The business structure and relationship between the person they are paying for and that business is very much something an agency needs to know about for HMRC reporting reasons...

[edison]

I wouldn't take any notice of the IR35 bit. They may do it under their process of IR35 checking but as usual they've got it wrong and nothing to do with IR35.

It's pretty common for agents to check this and many won't deal with you if you aren't the majority shareholder. We've got posts as far back as 2016 from contractors bumping in to this.

I might not have the full picture but the best idea as to why they do this we could come up with is the potential that the controlling person isn't signing the contract and not being majority shareholder you are not in charge of what the company might do going forward.

This.

I'm working direct with a client at the moment and more or less this exact clause was in the contract.

[northernladuk]

Really, it's none of the agencies business?

To be fair while they don't know and haven't assessed the risk it kind of is. No one should be engaging with a LTD without a basic level of diligence really.

[Bodger]

I wouldn't take any notice of the IR35 bit. They may do it under their process of IR35 checking but as usual they've got it wrong and nothing to do with IR35.

This was what threw me. I get asking about significant control (which obviously I've done with them previously when the contract was started), but why this would matter for IR35 was getting me suspicious.

[northernladuk]

This was what threw me. I get asking about significant control (which obviously I've done with them previously when the contract was started), but why this would matter for IR35 was getting me suspicious.

Yep IR35 is about the type/way the work is done. Not how a business is structured so at that point we should know it's the agent and not IR35. But from a business perspective I don't see it unreasonable to check that the person signing the contractor isn't some minor shareholder that has no say in how the business might be run and therefore pose a risk to the agent.

[Protagoras]

I must say that I've never been asked that, and would have had to answer that I was not the sole fee-earner if questioned, so I should probably be grateful that no one ever asked! What happens when one says 'no;?