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Advice for first time contractor?

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    Advice for first time contractor?

    I've been offered a contract role in construction project management for £300/day. I was initially told it was £300 LTD, but it transpires that it's actually umbrella. I'm trying to renegotiate to £400/day due to IR35. I believe that at £300/day I would net £200/day from going through an umbrella - although I'm not certain about that, because each online calculator spits out a different figure!

    The agent isn't so keen on trying to get me more and has come back to me today talking about £200/day. I believe they are getting paid a set amount by the client and want to squeeze me in order to maximise their profit. I said I've been offered a PAYE role for £50k and the agent tried to spin it to make it seem that I'd be getting £52k as umbrella... Not happening.

    So I'd like some advice on negotiating a higher amount. I've made it clear to the agent that I would not accept anything less than £300. I'm not sure what the client is willing to pay, but the agency certainly isn't keen on paying me more.
    The agent also suggested something about a CIS (construction industry scheme) as an alternative to an umbrella, and that he would get his payroll partner to go over the details with me. I don't know anything about CIS, but it sounds like I'm being pushed towards it because it's in his favour rather than mine. I've asked for the agent to set up a direct discussion with the client, but was brushed off.

    How would you play this?

    Thanks in advance.

    #2
    Nothing you can do if they won't budge. You tell them what you want, take it or leave it, be convincing to them that if they don't meet it you will leave it and wait. If you 'ask' or look like you'll fold whatever they do they'll have you over a barrel. This is their job remember. If they had a pound for every contractor they beat down over rate negotions they probably wouldn't have to work. You are new and they'll know it so even less reason to fold.

    That's about it. Here is my rate, meet it or find someone else and wait.
    'CUK forum personality of 2011 - Winner - Yes really!!!!

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      #3
      Know when you're got leverage, and when you haven't.

      You've probably shown your hand by now and don't have a lot at all - you might want to take the job anyway as it's a) something (£200 a day net is better than £0/day net as many posters here will attest) and b) gets you vital experience for the next contract.

      There comes a point where you hold out so long that it takes you months to make back the money you were holding out for, IF a job comes along...

      Also it's nothing to do with the client, they'll be paying a lot more for a combined package of services that includes the agents fee and finding, hiring and firing you. That figure is going to remain between the client and the agency, and how much is apportioned to you is going to remain between agency and you.

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        #4
        I've asked for the agent to set up a direct discussion with the client, but was brushed off.
        Not 100% sure about how it all works in construction but I'm sure it can't be that much different to IT. You are at the end of a food chance and are a replaceable commodotity, particularly at those rates. You don't have the power to be asking to meet the client. Your contract is with the agency. The end company is their client. The agreement between client and agency is non of your business. You'll get feed whatever breadcrumbs the agency think they can get away with. Usually you can catch the agency taking a bit too much on their margin but it's very rare you can get the client to up the money paid. It's generally on a charge sheet or a standard price they pay. They aren't interested in one contractor getting pushy. There will be 100's of you out there.

        If you play it well and the agency isn't on a fixed margin you might be able to take a few 10's of pounds off the agencies margin but rarely will you get £300 out of an initial £200 offer.

        It wouldn't be unheard of if the agency will dump you at this point. You've rocked the boat and are clearly unhappy so will jump ship at a better offer. I wouldn't progress with you from here on in if there are other suitable candidates. You've got to be careful when pushing back so early.
        'CUK forum personality of 2011 - Winner - Yes really!!!!

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          #5
          I've pretty much told them that below £300 is a no and that I'm not budging.

          I believe that I have some leverage in that:
          1. I meet and exceed the job requirements. 2. They're after someone quickly.
          3. I'm the only candidate they've interviewed for the role.
          4. Apparently the client really likes me.
          5. I have another job offer as a perm. Obviously less money.

          The initial offer was £300 ltd, but was then told £200 umbrella today. I'd rather not bother as I know my worth and there are other jobs out there.

          The agent has since come back to me this evening after speaking with the client, I've been informed that they'll agree to change my title. No idea if that puts me in the next band up. I guess I'll find out more tomorrow.

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            #6
            Construction industry is pretty bad as you already know as a PM. Lots of non payment issues, lots of angry people, lots of just screwing people around in general. Most people on this forum work in IT and lots of those in Financial Services, they are on complete polar opposites end of the spectrum. Construction may very well be the least professional environment I've ever worked in. It doesn't surprise me that they have lied to you and are continuing to lie to you. Combination of Recruiter + Construction Industry may just as well yield the least trustworthy person imaginable.

            There is a reason why CIS exists. CIS is a scheme where the client withholds either 20% or 30% of Subcontractors pay and pays it to HMRC. That is deducted from what you owe for tax. This was put in place because construction subcontractors just don't pay their taxes at all. Now they are bringing in reverse charge VAT for same reason, construction subcontractors do not pay their VAT bills, so again client will be responsible for withholding their own VAT and sending it to HMRC.

            I believe Project Management does fall within scope of CIS. I can't see how this would be outside ir35 unless you are operating as a true subcontractor and supplying labour subcontractors and/or materials. It's a little confusing what the agent said to you because you are really only going to be dealing with CIS when operating your own LTD or as a sole trader, not as an umbrella company as the umbrella company will be dealing with all of that.

            I think choosing between 50k perm and 300 umbrella is a no brainer, 50k perm wins every time. Your take home will be very similar between the 2 but with perm you get all the benefits of employment.

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              #7
              Well the good news is it's not working for a construction firm. I'll be working on the client side in the defence sector. Said client has various projects all over the country/world. The role is simply to manage the construction contract.

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                #8
                You can't "choose" between IR35 and CIS. The off-payroll rules (new chapter 10) and IR35 take precedence over CIS.

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                  #9
                  Why do my posts keep saying 'unapproved'? Why is it taking hours to approve a post?

                  Comment


                    #10
                    Your first few posts need to be approved by a moderator. This is an anti-spam measure. It takes a while because there's only a few moderators and we're not on 24/7.

                    Hopefully your next posts will be approved automatically.
                    Down with racism. Long live miscegenation!

                    Comment

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