12 month FTC

[SteelyDan]

Been approached about one of these this morning, and while the breakdown into contractor language (day rates) are still quite good, I was wondering how they operate in reality, & what the implications were?

Does it mean:

• I need to step out of my Ltd Co for the 12 months?
  
• I get hammered from a tax point of view?
  
• My company becomes dormant for the 12 month period?
  
• No financial reporting in respect of myco?

I was thinking the best response (to the enquirer) was to suggest staying within myco, charging at the day rate breakdown figure, plus of course VAT. I'm not convinced the end client would agree to this however, otherwise he would have offered a day rate, as opposed to a FTC in the first instance.

Does anyone have any practical experience of these things? Cheers.

[northernladuk]

I guess the devil is in the details of the contract. BUPA used to do these but you were effectively a permie but with no benefit and all the tax etc.
To counter this I am sure we had someone on here that had one but it turned out to be a normal contract with a 12 month period so could apply LTD to it etc...

Need to read the contract and tell us to avoid confusion. Are you on PAYE so effectively permie or will they allow you to manage your own affairs? Have you been given anymore details or just the term 'Fixed Term Contract'?

[SteelyDan]

I guess the devil is in the details of the contract. BUPA used to do these but you were effectively a permie but with no benefit and all the tax etc.


Well, purely at discussion stage on this to see if I would do it, so no contract to decipher. This ^ is what is sounding alarm bells - no benefit and all the tax.

I think, as per original post, I'll go back and say am interested but only through myco. Cheers.

[TheFaQQer]

• I need to step out of my Ltd Co for the 12 months?

Not necessarily, but you would typically become an employee of the client. If you can manage that as well as running your Ltd, then great; if not, then you would need to step away.

• I get hammered from a tax point of view?

Define "hammered". It means that you will be an employee, so will pay PAYE and NI on your income

• My company becomes dormant for the 12 month period?

Not necessarily. You don't need to make the company dormant, but chances are that it will have no income that year (assuming your work is the only revenue stream and you only work for this one employer in the year)

• No financial reporting in respect of myco?

Not necessarily. It depends what you do with the company.

I was thinking the best response (to the enquirer) was to suggest staying within myco, charging at the day rate breakdown figure, plus of course VAT. I'm not convinced the end client would agree to this however, otherwise he would have offered a day rate, as opposed to a FTC in the first instance.

Well, it's worth a try, but I wouldn't expect you to get anywhere with it. If they wanted a 12 month contract, then they would have offered a 12 month contract, with daily rate plus VAT etc., but they didn't. If they do change the offer to a "typical" contract, then expect the rate to drop significantly.

[SteelyDan]

Cheers TF.
I think you've more or less confirmed my thoughts.

[BolshieBastard]

Not necessarily, but you would typically become an employee of the client. If you can manage that as well as running your Ltd, then great; if not, then you would need to step away.


Define "hammered". It means that you will be an employee, so will pay PAYE and NI on your income


Not necessarily. You don't need to make the company dormant, but chances are that it will have no income that year (assuming your work is the only revenue stream and you only work for this one employer in the year)


Not necessarily. It depends what you do with the company.



Well, it's worth a try, but I wouldn't expect you to get anywhere with it. If they wanted a 12 month contract, then they would have offered a 12 month contract, with daily rate plus VAT etc., but they didn't. If they do change the offer to a "typical" contract, then expect the rate to drop significantly.

WTFS!