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To subcontract to a friend or get them to go umbrella

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    To subcontract to a friend or get them to go umbrella

    Hi all,

    First time poster...

    My wife and I have our own limited company providing IT consultancy services. One of our clients had more work than the two of us could take on so I recommended a friend who had experience in the industry. My client has offered them a contract and I was wondering if it may be worth me subcontracting the work out to them as the contract is short term initially so may not be worth the hassle for them to go down the umbrella route.

    Just wanted to get an idea of the pro's and con's of this approach so that I can give them a recommendation.

    Many thanks

    Mike

    #2
    How are you going to pay him - self-employed route or are you going to take him on PAYE?

    If you take him on as self-employed then you'll become legally liable for any taxes that he doesn't pay, so be careful.
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      #3
      There is no hassle setting up umbrella's really. Tell him to go to Contractor Umbrella. It took no time at all to set up. What would be hassle is him relying on you to pay him and putting friendship and money in the same bucket. I'd purposely go down the Umbrella route faced with this decision TBH.

      Sounds like you missed a trick though. If the client has more business than you can do you charge them more and supply someone else through your company. They way you've put it there it looks like it was a no brainer and you've picked the worst option available. Now you've put a recommendation in let your mate deal with it and keep out of his business (and vice versa) I'd say.
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        #4
        Originally posted by northernladuk View Post
        There is no hassle setting up umbrella's really. Tell him to go to Contractor Umbrella. It took no time at all to set up. What would be hassle is him relying on you to pay him and putting friendship and money in the same bucket. I'd purposely go down the Umbrella route faced with this decision TBH.

        Sounds like you missed a trick though. If the client has more business than you can do you charge them more and supply someone else through your company. They way you've put it there it looks like it was a no brainer and you've picked the worst option available. Now you've put a recommendation in let your mate deal with it and keep out of his business (and vice versa) I'd say.
        Right, thanks.
        First time something like this has come up so I was unaware of the best way to progress.

        If in future this comes up again and I supply someone through my company would I then not have the scenario that you mention above "What would be hassle is him relying on you to pay him and putting friendship and money in the same bucket"? Or am I missing something?

        Thanks

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          #5
          Originally posted by TheFaQQer View Post
          How are you going to pay him - self-employed route or are you going to take him on PAYE?

          If you take him on as self-employed then you'll become legally liable for any taxes that he doesn't pay, so be careful.
          I was thinking the self employed route but that sounds like it could be messy

          Comment


            #6
            Originally posted by TheFaQQer View Post
            How are you going to pay him - self-employed route or are you going to take him on PAYE?

            If you take him on as self-employed then you'll become legally liable for any taxes that he doesn't pay, so be careful.
            That is not true. You simply have to file an intermediary report. You are paying a company's invoice. How can you be liable if that company doesnt pay its tax?

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              #7
              Originally posted by AnthonyQuinn View Post
              That is not true. You simply have to file an intermediary report. You are paying a company's invoice. How can you be liable if that company doesnt pay its tax?
              If the friend is self-employed (Sched D) that is different to being a ltdCo. You're taking on an individual rather than a company.

              Comment


                #8
                Originally posted by AnthonyQuinn View Post
                That is not true. You simply have to file an intermediary report. You are paying a company's invoice. How can you be liable if that company doesnt pay its tax?
                He wouldn't be a company if he's self-employed or PAYE.
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