Contract query

[TomH]

Hi,

I've had a look around for some info about this but nothing gets turned up. I'm just about to take on a new contract and was going over the contract before signing it. One section that caught my eye which I haven't seen before was this (where I, the person, am the Consultant and my limited company is the Contractor)

"I agree to abide by the terms of the agreement between the Contractor and <the Agency> as if I were the Contractor as provided in that Agreement. Further I agree that <the Agency> shall have the same rights against me as the Contractor."

It sounds like they basically want me to sign the contract as an individual and not as a company so that, in the worst imaginable case, they can take action against me instead of (or as well as) my limited company. Surely that defeats the point of having the ltdco? I haven't sought legal advice yet (it's Sunday) but is this a standard thing or something I should be concerned about?

Thanks

[centurian]

It sounds like they basically want me to sign the contract as an individual and not as a company so that, in the worst imaginable case, they can take action against me instead of (or as well as) my limited company. Surely that defeats the point of having the ltdco? I haven't sought legal advice yet (it's Sunday) but is this a standard thing or something I should be concerned about?

Yep, sounds like they're trying to lock you in as an individual and bypass the protection that Ltd gives you.

Remember, the purpose of a Ltd company is also to protect the ClientCo and Agency against HMRC. That's why they won't let us be sole traders because then the risk falls onto them.

Personally I would be quite happy to operate as a sole trader, pay 8% NI and never have to worry about IR35, PAYE again, but Agencies/ClientCo's don't want that.

Sounds like the Agency want it both ways though. You have all the HMRC risk - and now the contractual risk.

You could argue this to the agency and say "I'm more than happy to operate as a sole trader, or as Ltd. But it has to be one or the other. Take your pick."

For what it's worth, I would stand my ground on this one (which is easy for me to say). The probably wouldn't try this on in a boom time, but with so many contractors on the bench, they might not be bluffing and could respond with "take it or leave it, there's a dozen more contractors out there that will take it if you won't".

[Qdos Contractor]

This is really poor from an IR35 perspective, for obvious reasons. It just makes your company look like a sham and HMRC would undoubtedly be quick to jump on it.

I've seen the clause in question a few times and the agency may well simply remove it on request.

[xoggoth]

Negligence claims, if that is what you had in mind, can be pursued against an individual doing the work. A company is no protection.

[centurian]

Negligence claims, if that is what you had in mind, can be pursued against an individual doing the work. A company is no protection.

Really. So if I put in a substitute and they screw up, they could sue the substitute, not me.

But then I guess if someone causes you damage, you don't necessarily have to have a contract with them in order to take action against them.

However, this doesn't just apply to negligence claims, but seems to tie the OP into all clauses that would affect the company (notice period, restriction etc.)