Starting work before a contract or incorporation - how bad a screwup?

[northernladuk]

That's him!!

And this is his and Sue's house, now for sale, well cheap cos it's a cracking pad, nine bedrooms, separate cottages, all for £850k....

Mind you, having lived in the village, nice though it is, there's bugger all to do, oil heating a fortune, nearest football team Queen of the South and no kebab shop....

Glenluiart House - Residential property available in Moniaive * South West Scotland

I shall forward that to my mum and SWMBO who nagged me about reading comics and telling me there is no money in a career in comics.!!

[beardedfool]

Thanks for all the advice. I'll speak to them and see how the negotiations go

Greg- thanks for the links, much appreciated.

Northernladuk- thanks as always, I owe you a beer if we're ever in the same area for all your help. 2 if you look through the contract for me

I'll probably go to Qdos and speak to them about looking at the contract and buying their insurance.

Centurian - thanks as well. I presume that your advice won't apply so much to the first tax free amount. Sadly I think I will have to get some money out reasonably quickly but that won't be for a month and a half so possibly about right for the first dividends.

Need to do a little more looking at the contract myself and comparing it to the 'ideal' one and then sleep on it. It's actually not bad from what I've read apart from "The Consultant may use a substitute to perform the Services but it is agreed that
any and all substitutes used by the Consultant will be subject to approval by the
Company and Client, such approval with not unreasonably withheld in the event of
a suitably qualified substitute." (Their mis-spelling of with)


Night all and thanks once again.

I'll promise to be more careful in the future but, to be honest, I'll very quickly find out how good/ bad the agency is over the next few days.



PS Alan Grant was a star - Dredd and Batman, nay bad.

[craig1]

If you start work before you're incorporated, the agency is taking a big risk because you're essentially contracting directly with the agency as a person and all sorts of liabilities come up from that these days.

You can get same day incorporation, a bit late now but that'd be how I'd do it.

Discuss how to bill the days with your new accountant. As long as you're not holding yourself out as limited before you get incorporated then you should be able to find a way around it. I personally would work for "free" for the time working as an individual but then invoice for extra charges for "miscellaneous services" as soon as I got limited, obviously I'd wait to get my contract signed first though!

You should aim for weekly invoicing with 7 day terms where possible. You've started so it's going to make that a bit harder but try anyway. The shorter you can make both components of invoicing (invoicing and getting paid) the better. That said, don't get hung up about it if you've plenty of war-chest money and you trust the agency (genuine trust, not naive "they sounded nice" trust).

Also, have you considered VAT? If not, should you? If so, make sure any invoices are set up properly to account in advance for VAT even though you're in the process of registration. Again, urgent advice needed from an accountant.

[Wanderer]

1) I’d like to get the contract checked out for IR35 - was thinking Qdos unless there’s somewhere better? – bit worried they’re saying 5 days but will talk to them, and NW, on the phone to see if this can happen quicker as I obviously need .

I don't know about NW but many "contractor specialist" accountants will review your contract for you.

2) I’d also like to get the contract checked out in general for all the other contractor pitfalls, as it’s my first one, do you know anyone that does this? Qdos as well?

Watch for stupid clauses saying they can terminate without notice for no reason, trying to make you personally liable (remember the contract is between your LTD and the agency, NOT you personally), demanding nonsensical amounts of professional indemnity insurance or demanding that you have Employers or Public liability insurance when they are of dubious value.

I see you've already spotted the nasty restraint of trade they try to slip in there. I hope you read the sticky about Opting out of the agency regulations.

3) Is there any way to mitigate the risk of charging for a not being incorporated at the moment whilst this is setup? I can imagine that I’ve put myself in a difficult position for IR35 amongst other things. I’d obviously rather charge for these days but if I have to write them off I will.

Don't sweat it, just bill for the days worked once you have your company set up. But get it sorted straight away and don't go starting work without a signed contract. It's definitely not something for the new boys to do. You got off lightly with northernladuk (personally, I thought his avatar was Judge Dread) so I'll give you a spanking on his behalf for starting work with no company, no contract, no insurance and probably unlimited personal liability if something went wrong:



Now don't do it again.

[TheFaQQer]

I'm astounded that the agency and client let you start work without any form of contract being in place.

Purely out of interest, if you negligently do something which causes a significant loss to the client, who do you think they are going to go after - your Ltd company (which doesn't exist and has insurance) or you personally (which does exist and has no insurance)?

If the agency doesn't have the forethought to recognize that engaging a contractor without any form of company in place to mitigate their tax risks, I'd worry about the strength of their contract with regards to IR35.

That said, there's nothing you can do now.

[Kelstar]

I can recommend Qdos, they turned my contract review around pretty quickly (1-2 days with rewrites) and NW are also my accountants. Happy with the service I receive.

Couple of things you need to think about:

* Buying PI insurance asap. You are working "at risk" at the moment without a contract but I am surprised the client let you onsite without viewing your PI certificate. You'll get the IR35 contract review free if you buy Qdos PI insurance.

* Open a bank account. This tripped me up. I got the contract in place (including rewrites) and VAT registered, incorporated, PI insurance before I went on site.... then realised my bank account wasn't open! So payment was delayed....

Good luck and congrats on the contract!

[d000hg]

If client and agent play ball, no reason you can't sort this out as long as you get your company sorted pronto. Actually, the client might not even need to know.

[malvolio]

I'll probably go to Qdos and speak to them about looking at the contract and buying their insurance.

OK for contract reviews, but for insurance look at joining PCG and getting covered that way - www.pcg.org.uk

[psychocandy]

OK for contract reviews, but for insurance look at joining PCG and getting covered that way - www.pcg.org.uk

Are we talking PI insurance here or IR35 insurance?

IMHO - Qdos is the best PI insurance but agree that joining PCG is best idea for IR35 insurance.

[TheFaQQer]

Are we talking PI insurance here or IR35 insurance?

IMHO - Qdos is the best PI insurance but agree that joining PCG is best idea for IR35 insurance.

What's the difference in price and coverage between the Qdos offering and the PCG offering for PI?