How about a Contractor Owned ManCo?

[nodric]

Well, if you say so. I'm not convinced.

It'd be better to have the contract assigned to the ManCo to begin with, and not have the contractor involved in any way with the finding of it. Of course, this only applies to countries that have MSC legislation anyway.

I’ve been thinking about this.

My view is that the contractor becomes a freelance sub-contractor to the ManCo, even if they don’t yet have a contract. The ManCo acts like a contractors union if you like, (I know that term makes me shudder too) that the contractor joins. He may even pay nominal subs of say 5 Euros a year.

I’ve always thought a contractors union is a great idea, provide a collective voice against those agencies that insist of unfair terms, squeeze rates, and generally treat us like cannon fodder. Call it an Open Source Consultancy, where freelance contractors are the partners and are able to work independently, or to work through the consultancy of which they are a member/partner, and to utilise its tax structure.

What this then means, is when an agency is seeking a contractor, the contractor may indeed be first point of contact on behalf on the ManCo, and subsequently get invited to attend an interview where he will assess the role, but he does this on behalf on the ManCo.

Remember, a contactor is a business, and as such he assesses the suitability of a role, and then decides whether to offer his services to fulfil the role. Contractors have to stop thinking of contracts as a job, and start using the correct terminology.

He then acts as a reviewer on behalf of the ManCo, and ensures the SOW (Statement of Work) is valid. The ManCo also reviews the contracts related to this SOW, and discusses terms and clauses with the agency, ensuring any restrictive covenants are removed, and ensuring it is IR35, MSC compliant if applicable under local law.

The contracts are signed between the ManCo and agent, and the contractor receives a sub-contract to carry out the work, fully supported by the ManCo (pool of resources, experts on tap etc).

This legitimises the organisation far beyond the usual split income schemes, and will create a structure that is difficult to challenge as a simple umbrella or avoidance scheme.

This is going to be something quite unique, and far beyond the scope of split income schemes run by clueless individuals who care little for your profession, or your legal protection. It may one day even be able to offer its pool of talent direct to the market, with all its members sharing the benefits.

If you want a similar model, look at lawyers. They operate as an LLP (Limited Liability Partnership). Each work independently, but use the partnership to leverage profits and benefits.

It’s time for this industry to welcome a new way of thinking and working, and to challenge the restrictions and limitations placed on us.

[Sergeant Murphys Cosh]

Emergency Budget in Belgium - June

Found in the Telegraph today,

"Belgium has today announced a substantial reduction in tax rates across the board, but it will be seen of particular benefit to those earning more than €34,330 a year.

The top level of income tax currently in Belgium stands at 50% and is due to be reduced to 40% at the end of this year, with lower bands being correspondingly reduced. The new 40% rate will also not apply until an individual's income level reaches €45,530.

This is the first time Belgium has taken such a step in its history, due in part to the want to re-balance what has been slated by many as an unfair burden on the population, and its desire to welcome more trade to the flailing socialist country.

These measures are not yet set in stone by the Belgian parliament, who according to the ex-Prime Minister and leader of the EU, Mr. Herman van RumpeyPumpey, has said that they will only be implemented if England wins the South African World Cup 2010".

[wind]

What changed you mind nodric ?

What made you change the figures from 30K to just ~4.3 for establishing Nominee directored IBC ?

What makes you also think it can't be challenged by dear BTA when there is no other activity in that IBC except your Belgian based contract ?

and most important can you recommend a Brussels based accountant that is savvy enough to work with this ? Mine would not stop repeating a mantra of create a BVBA buy a BVBA.

The nodric collective sounds also interesting but the lack of real team/schedule would make me want to investigate the first option you suggested.

[nodric]

What made you change the figures from 30K to just ~4.3 for establishing Nominee director IBC ?

Initial setup costs in Cyprus = 4-5K Annual 3K for base costs.

This will just about be doable for a one man band, all the caveats considered that this thread has discussed.

The higher costs come from all the added work if you were doing it for the collective.

The cost of a Nominee director in Ireland by comparison is circa 15K a year.

I also spoke to several IBC formation and services companies to improve costs.

What makes you also think it can't be challenged by dear BTA when there is no other activity in that IBC except your Belgian based contract ?

As a one man band, it will be challenging. However, as a collective, and if you re-read my last couple of posts, there will be much activity taking place outside of Belgium. Admin, accountancy, client and agency visits, and if you add the Contractor Union type aspects into the equation, it clearly is a fully functioning business, and not just straight tax avoidance. In simple terms, it will be easy to demonstrate the companies operating base and Centre of Economic Interest.

and most important can you recommend a Brussels based accountant that is savvy enough to work with this ? Mine would not stop repeating a mantra of create a BVBA buy a BVBA.

Alas, the ones I have used for years, have decided that they want to steer clear of anything other than double entry bookkeeping, as they consider contractors complex and hard work, compared to their ‘normal’ clients.

I honestly believe there is no other answer than to use a big firm who have the necessary tax skills in house, and are prepared to apply the rules to leverage the benefits for you. There are smaller firms than EnY or KPMG, but the associated costs will always be higher. For comparison, I pay my current guys 332 Euros a month for BVBA accounting, so more or less 4 grand a year! This for a good, but not exceptional service.

There are cheaper options, but as those that used Roland in the bygone days will tell you, you get what you pay for. I am investigating options for the ManCo, as people have been contacting me saying that including the accountancy would be a big bonus for them. I would like that to be an option, but it needs to be a firm big enough to have sway with the BTA, understand the laws, and go out to bat for you, but small enough to ensure costs are manageable.

The nodric collective sounds also interesting but the lack of real team/schedule would make me want to investigate the first option you suggested.

Firm plans are underway for the formation of the ManCo, and the Union (got to find a better phrase) will take form as a result of the ManCo operating model. For instance, the creation of a membership, and the virtual pool of resources etc.

I also think the concept of a Career Agent (an idea I’ve borrowed from an old friend, sorry T!), is the way forward, and extends the idea of a union fighting for your rights, by adding in counselling on how to improve your marketability, CV writing, interview coaching, contract and rate negotiations, and probably most interesting, having close relationships with the agencies to get you better, if not preferential treatment, by keeping your profiles in their view.

Even if none of this is ever used by a single contractor, the fact that it exists establishes that a 'real' company exists. However, I genuinely feel that the agencies will be eager to work closely with us, assuming we are compliant, and we represent a large body of contracting skill and expertise.

All ideas welcome

[Fred Bloggs]

Interesting. For "Union" = "Association" ?

[Sergeant Murphys Cosh]

All ideas welcome

Why not become a 'PCG for UK workers abroad', offering a range of products and advice first, and an umbrella service secondarily? Heck, why not even get affiliated with the PCG for real? Become their 'foreign office'.

[nodric]

Interesting. For "Union" = "Association" ?

Association of Independent Contractors AIC
European Association of Independent Contractors EAIC
Global Association of Independent Contractors GAIC

Or replace Association with Alliance?

[nodric]

Why not become a 'PCG for UK workers abroad', offering a range of products and advice first, and an umbrella service secondarily? Heck, why not even get affiliated with the PCG for real? Become their 'foreign office'.

Once proven, and legally tested, I am more than sure the PCG may wish to have an association with the new group. However, I want to take a more proactive role to represent contractors.

When was the last time someone stepped in to improve your margin, or ensure your contract was fair, even legal!?

There are a lot of very clued up contractors out there who do all this themselves, but I speak to dozens who are clueless, or have been so badly misled by all the BS spun by pimps and ManCos.

[Sergeant Murphys Cosh]

Or replace Association with Alliance?

Allegiance? Empire? Colony? Legion?

I'll quit while I'm ahead.

[BlasterBates]

If you set up a foreign company as you suggest, the profits of this company would only be taxed in Cyprus, or wherever it´s head office is, this is true. However if dividends are paid to a UK tax resident then in addition to tax in Cyprus, you will also pay UK tax (crediting Cyprus tax) on them I´m afraid:

DT5355 - Cyprus: Dividends


The only way to avoid UK tax in this case is to wait a few years, then move to Cyprus and pay yourself the divis.

Same applies to all other countries, as this is the general rule for divis.