Temp Contract to Ltd Company

**cykophysh39** · 15 March 2007, 10:05

All Pimps want to do that!!

**Bluebird** · 15 March 2007, 10:10

If you are going to go through a Ltd company you need a new contract.

Client has Contract with Agency - existing
Agency has Contract with you - NOW SCRAPPED
Agency has Contract with Ltd Co - New - if they won't do it, knock one up yourself and ask them to sign and return a copy to you.

You have "contract" of employment with yor Ltd Company.

**Rubberduck** · 15 March 2007, 10:16

Cheers,

I think I will create my own and send it to them to sign.
I awalys thought that the contract had to be made by the agency/client?

Anyways thanx.

**Kyajae** · 15 March 2007, 10:42

Originally posted by Rubberduck

Hi,

I am currently working on a temporary contract as PAYE through the agency.
I now wish to form a Limited company, which I have already agreed to a new rate with both the client and the agency.
Now when I ask the agency about a new contract, they tell me that I cannot have a new contract, as the client are able to get rid of me at any time.
Do I need a new contract, as the old one has info about temp work, and PAYE. Is there anything I could do to help this along, as I also think it may fall inside IR35.
Any help would be very much apprieciated, as it seems like the agency just want to keep me as PAYE and get as much money as possible.

Cheers.

The most important thing to remember is that once your form as a Ltd Co. you work for your Ltd Co. even though you are the sole director. This means a new tax reference number for yourself plus a tax reference number for the company. I'm not sure HMRC will quite see how you can be PAYE to two companies.

One thing to kep in mind; if your PAYE, not only are you having tax and NI deductued, someone is also having to pay Employers NI on your earnings at something like 11%, so this is costing the client more and no doubt the agency is upping their margins to cover for this too plus their VAT.

Being a Ltd Co. obviously means you get a gross payment each week and your responsible for administering it according to HMRC rules (so a good accountant comes in useful) but the bottom line is it should prove cheaper for the client as they should not be having to cover the ageny's margins with Employer's NI etc. I'd talk to the client and see if they find the new arrangements more attractive.

I collegue of mine was in a similar situation a couple of year's ago wanting to go from PAYE to Ltd Co. The agency just dug their heels in for the status quo. So he talked to the client who were more than happy with his work and wanted him to continue. So, he handed them in his two weeks notice. The client found another agent, told my mate who they were going to, my mate registered with the agency and rejoined the client as a limited company. I think he was only off the client's site for three days for the new arrangements to take place. The client paid less, the new agency was more than happy for the new business (plus they semed to take a bit more care of contractors) and the original agency lost out big time.

I guess, with a bit of ingenuity and persistence, no obstacle is insurmountable.

**Bluebird** · 15 March 2007, 10:47

"I'm not sure HMRC will quite see how you can be PAYE to two companies." - by having more than one job - for many of the lower paid in the country this is a something they have to do.

"One thing to kep in mind; if your PAYE, not only are you having tax and NI deductued, someone is also having to pay Employers NI on your earnings at something like 11%, so this is costing the client more and no doubt the agency is upping their margins to cover for this too plus their VAT." - the deductions will come out of your "slice" - it just reduces the amount you get paid.

**VectraMan** · 15 March 2007, 10:54

Originally posted by Kyajae

I'm not sure HMRC will quite see how you can be PAYE to two companies.

In my experience they put you on "emergency" tax and then wait until you do the self-assessment to sort it all out.

**Not So Wise** · 15 March 2007, 16:25

Originally posted by Rubberduck

I awalys thought that the contract had to be made by the agency/client?

In most cases it is...but in all cases you prefer it to be done by yourself as anything they draw up will most likely favour them thus either forcing you to engage in time consuming and annoying contract negotiations or signing an unequal contract

Where if you draw it up you can either have it favour you at best or at worst have it that it is equal and fair to all parties. (btw by "you" mean you get it done by someone on your side who is qualified or you get an off the shelf one from somewhere like the PCG not that you write it yourself unless you are qualified to do so)

Temp Contract to Ltd Company