First time Contract Issue

[charlie19]

Dear Gurus,

I'm new to this forum and new to contracting but cant stress enough how much invaluable information I found here that helped me embark upon a contractor journey after long years of permanent role. I was looking for that first contract which I recently nearly managed to get, but fell through at the last minute. I was recently contacted by an agency for a 1 yr contract role. Initially they mentioned that they're only able to offer a certain daily rate, but I had to decline as I found it too unreasonable for my level of experience. I was then told that because my profile was a good fit they would check with the end client and let me know which they did and we both agreed to a certain rate. I was then scheduled for the 2 rounds of interviews which I cleared and was told that I have been offered the role.

The agency send me a detailed email with details about the rate, date of joining and documents (sensitive docs like passport, DL, UtilityBills, Bank Stmts etc) required to be send. I replied to the email confirming acceptance and emailed all the scanned documents. I then set up a Limited Company, appointed an Accountant and was all set to secure the contract which I was told will be send to me shortly. But since I didn't hear from them for a while I decided to contact them and asked about the progress. I was told that the end client couldn't pay the daily rate that was agreed and that I will have to renegotiate or let it go. All this after verbal and written(email) agreement. The rate I was told the client was willing to pay was ridiculous as it also included agent margin in it. I'm now in a dilemma as I'd been waiting for long for a contract opportunity and in the process had to turn down some permanent roles. I'd appreciate any help/advise that I can get on how to best deal with this situation as I've not been in one like this before. I've already got my company registered and other formalities with HMRC are ongoing. I don't really know where to go from here as my ship is wrecked , wondering is there any legal binding to a verbal/written agreement prior to signing contract ? Please help.

Thanks in advance

Regards
Charlie

[stek]

Dear Gurus,

I'm new to this forum and new to contracting but cant stress enough how much invaluable information I found here that helped me embark upon a contractor journey after long years of permanent role. I was looking for that first contract which I recently nearly managed to get, but fell through at the last minute. I was recently contacted by an agency for a 1 yr contract role. Initially they mentioned that they're only able to offer a certain daily rate, but I had to decline as I found it too unreasonable for my level of experience. I was then told that because my profile was a good fit they would check with the end client and let me know which they did and we both agreed to a certain rate. I was then scheduled for the 2 rounds of interviews which I cleared and was told that I have been offered the role.

The agency send me a detailed email with details about the rate, date of joining and documents (sensitive docs like passport, DL, UtilityBills, Bank Stmts etc) required to be send. I replied to the email confirming acceptance and emailed all the scanned documents. I then set up a Limited Company, appointed an Accountant and was all set to secure the contract which I was told will be send to me shortly. But since I didn't hear from them for a while I decided to contact them and asked about the progress. I was told that the end client couldn't pay the daily rate that was agreed and that I will have to renegotiate or let it go. All this after verbal and written(email) agreement. The rate I was told the client was willing to pay was ridiculous as it also included agent margin in it. I'm now in a dilemma as I'd been waiting for long for a contract opportunity and in the process had to turn down some permanent roles. I'd appreciate any help/advise that I can get on how to best deal with this situation as I've not been in one like this before. I've already got my company registered and other formalities with HMRC are ongoing. I don't really know where to go from here as my ship is wrecked , wondering is there any legal binding to a verbal/written agreement prior to signing contract ? Please help.

Thanks in advance

Regards
Charlie

Nope - move on and put it down to lesson one - you're in business now....

[jamesbrown]

You may not like the answer, but that's a done deal, let it go. Your first decision is whether you actually want to be a contractor; it sounds as though you're unsure. If not, it should be very simple to close down the company, given that you've had no income, but an accountant will be along shortly, or you can check with your own. Otherwise, keep looking for new contracts.... one will turn up, but you may need a reality check on your rates. Afterall, you may have some experience as a permie, but that doesn't automatically translate to delivering discrete projects/contracts.

[Contreras]

is there any legal binding to a verbal/written agreement prior to signing contract ?

Theoretically, maybe. Practically, never.

Everything is "subject to contract", but remember that cuts both ways.

However I'd want to get back in touch directly with the client to find out if it was a genuine screw up or if the agent is/was trying to pull a fast one on the rate. Put it to them that you are ready to start right away. It's also possible the client either didn't make an offer at all, or couldn't get it sanctioned, in which case chalk this one up to experience.

And next time refrain from complying with the agency's own demands for paperwork until you have the signed contract from them.

[mudskipper]

It is tough. What's the notice on the contract? If it's short, and you have no money to tide you over, you do have the option of taking it at the lower rate and keeping looking - not normally a good thing to do, but they did mess you around (assuming the client did know what rate the agent had offered you). Or negotiate a shorter contract - you don't want to be tied to a crappy rate for a year. Or you keep looking and hope something comes up quickly.

[SueEllen]

For future reference always get the client's details and if there are any issues talk to them. The agency will forbid it but they won't know until after you have done it unless you stupidly tell them.

Secondly always keep looking for a role until you are actually working on the client's site even if you have signed a contract. It's hard work fielding calls from other agents and potential clients and telling them there is nothing in the pipeline yet, but you need to do this.

[Clare@InTouch]

If you do decide to close the company and you've never used it, it's easy to do. Your accountant may charge a reasonable fee to close it for you, under £100 I'd expect, or you could do it yourself.

If you're registered for VAT and PAYE you'll need to close both schemes. If you've never traded then you may be able to simply call HMRC and they will cancel them, certainly they should close the PAYE for you, otherwise you'll need to complete a VAT de-registration form like this one here: HM Revenue & Customs: Cancelling your VAT registration

Give the CT people at HMRC a call to (you should find their number on the form they sent you to complete just after you incorporated) and advise them the company has never traded, and you're intending to seek dissolution.

You will need to wait until HMRC confirm the schemes are closed, then submit form DS01 to Companies House with a cheque for £10. Three months later, assuming there are no objections, the company will be struck off. http://www.companieshouse.gov.uk/for..._a_company.pdf

However, if there's a chance you may need the company again in future I'd suggest you leave it a while. There's no rush to do anything, just file nil VAT returns and nil PAYE returns until you make a decision. That will be cheaper than closing down only to have to set up a new company 6 months later if you change your mind.

You have a while before any official submissions are needed - ask your accountant to list all dates for you so you know what your deadlines are.

[rd409]

First thing, it was a brave decision to start off with a Limited company. This is one of the reasons, I would recommend starting with a brolly. But now if that is done, move over it.
One of the options is to accept the role but make sure the duration of the contract is reduced from a year to maybe 3-6 months, and keep looking. If they are willing to shaft you, you have full right to do it in return. Atleast you would be able to get some expenses out of the whole experience. This is only if you want to stay in the game for long time, otherwise as everyone has said, just close the company and put this as a learning experience.

my 2p worth.

[craig1]

Your alternatives:

1. Stand your ground over the rate but be willing to walk if they don't budge. The agency may be just pulling a fast one by suddenly saying "client wants to pay less". I've seen it happen too many times, they may be just exploiting your inexperience as a first timer.
2. Negotiate. If you really want the role or are getting a bit desperate then you can negotiate. Set yourself a band, high to low, of what you'd accept, don't tell the agency that. though. Tell the agency the high end of what you'd like as a compromise but be willing to go anywhere in that band in the end.
3. Accept the low rate. If you're convinced it's a genuine client rate drop then you can take the role if it's something you really want. There's nothing like experience as a contractor on your CV to help get you more contracts, agencies often shy away from first timers for many different reasons. That said, it does show a bit of bad faith on the part of both the client and agency though if you've interviewed and done everything else in good faith so I would be pushing for a bit more on the rate, also steel yourself to future acts of bad faith.
4. Call the client. Even if you don't have a business card, a call to reception will get you through to the interviewer. A bit of a nuclear option this one, it'll either get you in the door quickly at a better rate if the client finds out the agency are messing about or it'll get you kicked from the contract permanently.

While you're doing that, as mentioned above, get looking for your next role. Treat this with a bit higher priority than fixing the current mess.

[JPennW]

And next time refrain from complying with the agency's own demands for paperwork until you have the signed contract from them.

Good advice - my own contract start seems to be going the way of the Op's, and the recruiter can't seem to give me a straight answer for an update.