Shareholding offer by client

[jmo21]

if it's not worth anything now, and you can't see it being worth much in the future, then it seems like an easy answer to me.

Great idea for keeping permies around long term, vesting over years, on the hope that they will be worth lots.

Just doesn't fit for a contractor even if you would like a long-sh stay with them.

[clearedforlanding]

Can't say whether it is worth a punt, or not and cannot add to what has already been said.

but....this bit is the deal breaker for me:-

Well spotted Mark, we must all be blind.

I have reread the OP and I am really struggling to see any value proposition on the table.

[MrMarkyMark]

Well spotted Mark, we must all be blind.

I have reread the OP and I am really struggling to see any value proposition on the table.

Actually, to be fair, the sharp eyes of NLUK also spotted it and highlighted it in his quote.
In any case as it stands, I would be out.

Obviously if some things changed, I would have a look again.

[SouthernContractor]

I think we've reached a consensus. I can't really see the value proposition either. Much better to keep things as they are now. i.e. a simple, project linked, business to business relationship.

If I were to take on shares and tighten my links, it would limit my ability to do business as an independent contractor.

Even if I could sign up for the share offer with the forfeit conditions (which I don't think I could), the risk of share forfeit at some point in the future is high. As once there was a gap in contract work, I'd inevitably have to seek work with competitors in order to maintain income. I'd have to do this anyway at some point to maintain a mixed client base and remain squeaky clean on IR35. And would my clients competitors really want to work with me if I was a shareholder? No. So I'd increase the chance of ending up on the bench for longer.

Even if I managed to hang onto the shares and were able to cash them in (which may not be feasible) at £75K in five years, the risk losses to my business in the would probably cancel out the much of the share value.

I can't see any value to my business other than a bit more of a guarantee of long running contract work in the medium term. Which is always nice to have but then if you're doing a good job then people want to retain you anyway and if they don't have to work to do so, others will soon enough.

Thanks again guys.

[MrMarkyMark]

Good choice, thanks for the update

[northernladuk]

Sounds like a good outcome to me!

[Bluespider]

Based on the fact that there does not seem to be any value proposition either now or in the forseeable, I agree with the consensus.

But...

If there had been some value to be had in the shares, couldn't they be issued to your ltd company rather than you as an individual. That way any caveats or forfeiture would be held in the Ltd. If you needed to operate elsewhere you could spin up another ltd company to deal with that, as you aren't the shareholder there is no legal ramifications on you working elsewhere.
Obviously the devil would be in the detail of the contract and only worth doing if there was real value in the shares.

[MrMarkyMark]

If there had been some value to be had in the shares, couldn't they be issued to your ltd company rather than you as an individual. That way any caveats or forfeiture would be held in the Ltd. If you needed to operate elsewhere you could spin up another ltd company to deal with that, as you aren't the shareholder there is no legal ramifications on you working elsewhere.
Obviously the devil would be in the detail of the contract and only worth doing if there was real value in the shares.

Wouldn't there be tax implications doing that?

[Bluespider]

Wouldn't there be tax implications doing that?

They would be held as an asset by the Ltd. If sold at a profit, taxed accordingly. I think they would need some notional initial value so if you ever sold them at a lesser price they would reduce your taxible profit accordingly.

Could potentially be quite useful.