Direct client wants to switch to agency... umm help?

[LondonManc]

I did state his time there is a bigger worry than how he's engaged which is true on three fronts. Firstly his engagement method has next to nothing to do with IR35 so time is more of a worry. Secondly if he thinks the engagement could show an issue with his knowledge of IR35 and thirdly nearly everyone I've met with over 5 years at a gig is part and parcel and have taken their eyes off the game. I did 4 and bit years and it was getting harder and harder to look the same as I did when I first started.

So yes. He's got more to worry about re time there than his engagement method.

I'd say a lot of that depends on the type of engagement, especially how the contract is worded. Otherwise, how would the likes of Kyocera, Otis, etc operate as long term suppliers of printers, lifts, etc to firms? If SteeevvoLtd is the sole supplier of, say, EDI technology platforms to ClientCo, then why shouldn't the relationship continue as a B2B relationship?

If I was Steeevvo, I'd either film Jackass 4 or seek to be bought out of his exclusivity deal to the tune of, say, £25k. Accept it's been a great run and see if there's recompense for a greater level of risk.

[Old Greg]

I'd say a lot of that depends on the type of engagement, especially how the contract is worded. Otherwise, how would the likes of Kyocera, Otis, etc operate as long term suppliers of printers, lifts, etc to firms? If SteeevvoLtd is the sole supplier of, say, EDI technology platforms to ClientCo, then why shouldn't the relationship continue as a B2B relationship?

If I was Steeevvo, I'd either film Jackass 4 or seek to be bought out of his exclusivity deal to the tune of, say, £25k. Accept it's been a great run and see if there's recompense for a greater level of risk.

But realistically, on what basis can the OP expect to be 'bought out'?

[LondonManc]

But realistically, on what basis can the OP expect to be 'bought out'?

I wouldn't expect him to be bought out by the client, but by the incoming agent.
That said, if he went up from, say, 500 to 650 per day by buying out the previous agency, then simply billing 650 to new agency shouldn't be an issue if ClientCo are prepared to accept it. What it does do, though, is leave him as one of the highest bills on the agency list.

[Old Greg]

I wouldn't expect him to be bought out by the client, but by the incoming agent.
That said, if he went up from, say, 500 to 650 per day by buying out the previous agency, then simply billing 650 to new agency shouldn't be an issue if ClientCo are prepared to accept it. What it does do, though, is leave him as one of the highest bills on the agency list.

But why would the agent buy him out? When he bought the agent out, presumably he had some kind of handcuff clause. Now, the client wants to move contractors to contract via an agency, I don't see what leverage he has.

[DeludedKitten]

I've made a lot of noise regarding IR35 status - Move from a company supplying services to a temp supplied via an intermediary; Higher and lower contracts not being aligned (potentially, they won't show me theirs); Agency reporting all non PAYE payments to HMRC being a future hitlist etc. But do not have a supporting point of contact.

How would this affect your IR35 status in any way, shape or form?

If you are worried that you're inside and aren't paying the right level of tax, then this is your chance to leave and find something outside IR35. If you're worried that you might have an investigation that you'd still win, then make sure you have good protection to cover the costs of the investigation and stay. If you're just trying to confuse the client to get your own way, then make sure you have a better argument than this one (hint - they don't care about your IR35 status, even if they understood it...).

Any thoughts on other issues I may have missed or approaches I can take?

I have raised the fact that the contract is mine (I purchased it) not theirs to award to whoever, but it has fallen on deaf ears and doesn't look like they will entertain a rate rise to recoup these costs long term.

If you can't recover your costs then you either suck it up and stay or suck it up and leave. Either way, you're going to absorb that £25k.

[LondonManc]

But why would the agent buy him out? When he bought the agent out, presumably he had some kind of handcuff clause. Now, the client wants to move contractors to contract via an agency, I don't see what leverage he has.

We don't know; I'm suggesting that he may have had something to protect himself from this situation, especially having spent 25k to get to where he was.

[steeevvo]

(Sighs)

Hi all,

Thanks for the feedback.

If i’m honest, there definitely are elements of being a petulant child (thanks for the wake up call, fatJock).

To answer some of the other points:

- No, company pay the 5% premium, my rates stay the same;
- 25k buyout was an amazing deal, I benefited greatly. Usually this is hit or miss, but agency had messed up and I saw an opportunity.
- you are all correct with regard to contract terms being the defining yardstick (as well as actual working practices)
- I have had a pretty balanced mix of direct and agency work (17 yrs as a contractor) and would always work direct wherever poss. Agencies are just <comment deleted>.

My concerns re: HMRC - there can be no doubt that they have their eyes set on on PSCs in the private sector. The legislation brought in a few years ago which means that agencies and intermediaries are required to report all payments made where Paye is not deducted is indicative (to me at least) that hmrc are building a hit list. All it takes is one defining win in the courts and everybody on that list is a target.

Up until now I feel I have been flying below that radar.

Do I sound sceptical? Well you should be too :-)

Lastly, again with regard to ir35, despite my best due diligence, the agency contract with the client could contain terms that ultimate nullify my effort to make my contract outside of ir35. These are outside of my control and therefore a risk.

Thanks all for the input.

Steeevvo

[BlasterBates]

They want a simplified billing, you are shoving their costs way up, because you are the only one who has a completely set of different terms than everyone else. If you stay direct they will receive two bills, one bill for almost all their contractors and another one for "Steeevo". That will effectively double their admin costs.

You have no chance of keeping out of it.

[Hobosapien]

The movement from direct to agency is irrelevant for IR35 in that either way you should be ensuring your working practices and contract wording pass a review, so even if the change increases the likelyhood of an HMRC investigation (and that's by no means certain) you are still covered.

So you are no worse off than before if you've been careful all along. Check the agency's contract is no worse than the direct one you had before, or the previous agency one, and get it reviewed and backed up by insurance if you want as much peace of mind as is possible in the current situation.

[Untouchable1]

I don't really see what the issue is here.

They are just using them to manage some admin....