Changing Contract terms mid way through Contract agreement

[Herby]

Guys, I started my first ever contract 7 weeks ago via an agency. The contract i signed with the agency was to be paid via PAYE terms, my first 2 weekly payments were consequently via this method. The reason for a PAYE contract was that i needed money ASAP and was unsure what to do with reagrds to the impending SMC regulation changes.

I now intend to form my own Ltc company which means a change of contract with my agency, the agency being receptive to the idea.

I have over a months worth of timesheets, which i would like to bill the agency for under my new company.

Can anyone tell me if what i intend to do is legal, the contract between the agency and the client is not going to be changed, it is just between the agancy and myself.

Any help is appreciated.

[Bluebird]

I don't think what you are proposing is illegal, however I would advise you to rehearse the answer to the following question from HMRC....


Mr X, why have you moved from being an employee of a company A to that of being an employee of a company B with company B performing the same role as you did as an employee for Company A whilst as an employee ?
Furthermore as you are the director and shareholder of Company B we believe that you have incorporated purely to avoid paying tax at the perscribed rates for your income.

My advise to you would be to see out the current contract, then go Ltd for the next one...

[Herby]

Thanks Bluebird.

I think i need to speak to someone about this.
I am under the impression that it is the contract between the agency and the client which falls under IR35 territory.

[VectraMan]

IR35 aside, ask the agent. I would think it's in their interests not to have you PAYE (more work and/or risk for them), so they may be more than happy to accomodate you. But they're under no obligation to make a new agreement and cancel the old one, which is what you're asking.

How long is the contract? If it's not too long, I would just live with your mistake and get your Ltd. company ready now for the next time.