Agent requests indemnity

[LisaContractorUmbrella]

Would be interested to see how they could go about actually deducting PAYE. First off they would surely need your tax code / NI Number and all the other things you don't bother to collect when you a dealing with a PSC in a B2B relationship.

I am sure others on here are more rounded on where this could lead, but ultimately this could lead to all sorts of deemed employment issues.

Another perfect example of an agency in a panic when they don't understand the issue [prays that my compliance department hasn't sent this out]

Presumably if they weren't satisfied that the correct tax position was being adopted they would take the OP on their books and cancel the PSC contract - it's the only way that the situation could be dealt with in the way that they describe.

Not sure this is a panicked response or not but the indemnity clause is a fairly typical way for some agencies to deal with compliance issues

[VectraMan]

The Supplier and the individual Directors personally jointly and severally indemnify
(and will continue to keep indemnified) both <AgentCo> and its Directors against any
claims by HMRC or any government body or fiscal authority for any sums required to
be paid in connection with the fees paid by <AgentCo> to the Supplier for the provision of
the Services. This includes any PAYE, Income Tax, National Insurance Contributions
and any other taxes or levies or penalties.

So what they're saying is if you a) don't pay your taxes, and b) the government find a way to make the agent pay, then you personally owe the agent the taxes that you should have paid in the first place.

Seeing as neither a nor b are likely, what's the problem? They just want an assurance that you will continue to operate as a Ltd., which you will. If their fear is completely groundless then this clause is irrelevant.

[Wanderer]

In order to ensure full compliance with the legislation effective 6th April 2014

What legislation?

[LisaContractorUmbrella]

What legislation?

Changes to the Agencies legislation within section 44 of the ITEPA

[Boo]

So what they're saying is if you a) don't pay your taxes, and b) the government find a way to make the agent pay, then you personally owe the agent the taxes that you should have paid in the first place.

Seeing as neither a nor b are likely, what's the problem?

The problem is that the agency are asking the OP to personally pay their tax for them if HMRC should come knocking. Note that this is the agency's tax, not the consultancy's tax, just because HMRC will never ask the agency to pay the consultancy's tax.

I'd walk away from any such commitment, but of course the OP must come to their own decision.

Boo2

[TheFaQQer]

So what they're saying is if you a) don't pay your taxes, and b) the government find a way to make the agent pay, then you personally owe the agent the taxes that you should have paid in the first place.

Seeing as neither a nor b are likely, what's the problem? They just want an assurance that you will continue to operate as a Ltd., which you will. If their fear is completely groundless then this clause is irrelevant.

If the agency doesn't pay the VAT relating to the supply of your company, then your company and the directors would be liable for it.

It's about them not paying their taxes properly.

[outsidein]

It took a while but the agency backed down from the personal indemnity

Then we argued the toss over the wording of the rest of the indemnity which ws decidedly IR35 toxic - affecting the substitution clauses in the contract.

Anyway, it was reduced it to "Is your Ltd company a PSC", "Your limited company will not forward the money to a 3rd party" and "will you pay yourself only salary and dividends"


Latterly it contained "Are you a shareholder of your limited company", "you won't forward monies to a 3rd party for providing the services" and "you pay taxes on the dividends and salary you pay the directors"

Allegedly 40 our of 50 consultants signed the first version, and we're down to the 'last few' - but the deed is now somewhat less onerous.

I struggle to believe that 80% of contractors would just sign a personal indemnity!!!

FYI the agent originally asked for the NI number under the signatures - I am waiting for confirmation that these will not be required.

Its been a nasty couple of weeks - I wouldn't wish them on anyone.