Payments terms and inside IR35 what is "normal" today ?

[polarbearuk]

Hi

Sorry if this is a noob question

I am coming from Perm - but have some knowledge of the contracting market from 10+ years ago.

I started a 6-month contract today with a UK bank via Capita > agency > umbrella. As it's a bank it's inside IR35.

umbrella contract signed last week. Picked one with good reviews from here. Capita > Agency contract was only sent over today (end of my first day on-site).

Payment terms are now saying 30 days and as the assignment has started cannot be changed. Umbrella says it has nothing to do with them, and the agent says the contract between agent / and umbrella is nothing to do with me, Just seems a huge complex mess of risk. How on earth do you negotiate with all these back-to-back contracts.

Agent verbally agreed on 7-day payment terms when we first spoke - which he is not disagreeing with but saying it's out of his control.

No time to negotiate anything as already started.

In this new world of Inside IR35 - is this normal? Seems we still get all the risk and zero reward. HMRC says we are employees but at least employees know they get paid at the end of the month.

Does anyone have any experience of capita and their payment reliability? What worries me is that 30 days turn into 60 or 90 days. There are 3 parties to this agreement. If capita / agency one falls apart then i won't know until it's too late. Don't agencies/umbrellas factor the invoices anymore and pay as long as the timesheet is signed anymore?

I thought with inside IR35 you would get some protection. is there insurance I should take out to protect myself?

Thanks

[quackhandle]

Hi
In this new world of Inside IR35 - is this normal? Seems we still get all the risk and zero reward. HMRC says we are employees but at least employees know they get paid at the end of the month.

Yep is the norm now and why I didn't bill for over five months and watched my warchest take a severe beating.

I was one week away from going permy before getting current gig.

I thought with inside IR35 you would get some protection.

Nope just the lube.

qh

[SueEllen]

Agents lie all the time. Many have default payment terms and it's only if you speak to the right person e.g. their manager can you get different payment terms.

Capita will pay your umbrella on time.

I ended up being in a chain that involved Capita paying my ltd company a few years ago and I had no issues with the payments.

[ladymuck]

It's not going to help you now but in future don't sign anything until you have all the facts on paper before you, and don't start work either as that implies acceptance of terms you haven't seen.

It is right that the contract between the agency and umbrella has nothing to do with you but you should still get confirmation of actual payment terms before you start work - the umbrella will pay when paid which isn't helpful if you don't know on what basis they will be paid.

[PerfectStorm]

Spent most of my time on 30 day terms, never once gone significantly beyond that. Don't worry about it.

[northernladuk]

First off. You've made the same mistake as so many people do. Being inside is purely a tax situation. Has nothing to do with your clients, they you work etc. You are still contracting but with a different tax regime. B2B payment terms of up to 90 days with multiple people in the chain do not change. Only the way you are taxed. No extra protection or anything.

B2B payment terms of anything up to 90 days is the standard. What is slightly different in your situation is that agents will factor the payments. You may get 7 days from some agents but that is because they are taking on the risk of not being paid for the 60 days in the contract between the client and them. In your case they aren't willing to factor so they've passed the full payment term on. Captia is big enough to pay it's suppliers so I certainly wouldn't be worried about non payment.

I've also been on 30 days for most of my contracting career and bar a few late payments (which has happened on 7 days terms as well) I've had no problems being paid.

You've not read the contract and understood your situation properly and you are panicing where you need not. But in future you are a CONTRACTor.. Read and understand your contract.

[Lance]

Crapita are good payers. Monthly payments surprise me as I've been with them twice (for outside gigs) and payments were weekly.

And you do have some protection. You're an employee of the umbrella so you have some limited employment rights. Not much but more than you would as an outside/B2B contractor. Just make sure you get your timesheets signed and submitted on time.

[eek]

Crapita are good payers. Monthly payments surprise me as I've been with them twice (for outside gigs) and payments were weekly.

And you do have some protection. You're an employee of the umbrella so you have some limited employment rights. Not much but more than you would as an outside/B2B contractor. Just make sure you get your timesheets signed and submitted on time.

Depends on whether in one of the various contracts / pieces of paper signed by the OP (and umbrella) have opted out of the Agency Regulations - it's an utterly insane thing for an umbrella to do but many do it as it's a requirement to be get on an Agency's PSL.

However the issue here may not be with Crapita - I know of a number of Agencies (including some large ones) who are definitely invoicing (at least some of) their end clients on 7 day terms and paying on 30 days terms. Heck some even do the same on 45 day terms.

[ConsultingTechArchitect]

With professional services, they could hit you for the length of the payment terms with their clients, or even more (but 30 days is till common where the firm is large enough to have strong cashflow/reserves). With end clients, you're more likely to get 30 days.

[eek]

With professional services, they could hit you for the length of the payment terms with their clients, or even more (but 30 days is till common where the firm is large enough to have strong cashflow/reserves). With end clients, you're more likely to get 30 days.

What has consultancy and end clients payment terms got to do with the payment terms of an employment agency?

One of the big points of using an agency is that they have to pay the work regardless of whether their client pays and ideally should do so within 7 days of the work being done...

Heck I mentioned an agency with 45 day payment terms below.

The requirement for an umbrella to get on their PSL is to pay the worker within 7 days so "lending" the agency the money for 38 days....