Recruiting Via Ltd Company

**pmeswani** · 16 February 2012, 15:38

Originally posted by kaiser78 View Post

A fellow contractor colleague of mine may have the opportunity to take up a role at the same client I am currently at. I am thinking of providing his services to the client via my Ltd company, in effect acting as the recruiting agent paying daily rate to contractor and charging daily rate + commission markup to client co.

Appreciate I would need to have an IR35 friendly contract in place, but to see if this is viable / worthwhile, what would the impact be on my ltd company in terms of additional effort, vat FRS, company accounting etc ?

Just out of interest, did you go through an Agent to get your role? If so, does your contract allow you to resource people for different roles without getting the agent involved? If you went direct, are you required to register your business as an Employment Service Business? Are you required to comply with the AWR? Would you need to arrange a contract with the client that is different to the current contract you have at the moment to outline that you are providing an employment service, etc?

Too many questions, and I would be interested in knowing the answers myself.

**minstrel** · 16 February 2012, 15:44

I think the main impact on business would be that VAT flat rate scheme may not be worthwhile any more.

My concern about this sort of situation is the potential damage it could have on relationship with your colleague. Is he a mate or just a guy you know? Maybe you can make a few quid by skimming money off the top of his rate. Personally, I'd rather just introduce him direct to client, accept a beer for helping him out and hope he returns the favour one day.

I know a few contractors who do this sort of thing and they are generally not respected by their peers.

Also, I'm assuming you have direct contract with client? If there is an agency involved you will have probably signed something in the contract saying you are not allowed to introduce anyone to client other than through the agency.

**Goatfell** · 16 February 2012, 15:52

Originally posted by pmeswani View Post

If you went direct, are you required to register your business as an Employment Service Business? Are you required to comply with the AWR?

IIRC it's only if acting as an employment or recruitment agent is your primary business, whether that's by time, turnover or profit I'm not sure, but you could be looking close to 50/50 on some criteria so you might have to be careful.

To the OP, I take it that your friend would be using his own Ltd Co., if not you'd have to start thinking about all sorts of PAYE stuff; tax, NI, pension even.

As pmeswani said, "Too many questions, and I would be interested in knowing the answers myself."

**JoJoGabor** · 16 February 2012, 16:17

I would jsut keep it as a B2B agreement. His LTD company invoices your ltd and that is an outgoing. Obviously VAT would probably be charged, which may complicate your VAT calculations but cant see it being too bad.

You would probably have to upgrade your PI insurance.

**northernladuk** · 16 February 2012, 17:05

Originally posted by minstrel View Post

I think the main impact on business would be that VAT flat rate scheme may not be worthwhile any more.

My concern about this sort of situation is the potential damage it could have on relationship with your colleague. Is he a mate or just a guy you know? Maybe you can make a few quid by skimming money off the top of his rate. Personally, I'd rather just introduce him direct to client, accept a beer for helping him out and hope he returns the favour one day.

I know a few contractors who do this sort of thing and they are generally not respected by their peers.

Also, I'm assuming you have direct contract with client? If there is an agency involved you will have probably signed something in the contract saying you are not allowed to introduce anyone to client other than through the agency.

I am with this. Was thinking about posting but it just feels like a bad idea to me so I couldn't put my ideas down to something I didn't like the idea of. If the client has 20 contractors direct and this guy is going through you he is going to know he is on 15% or so less because of your greed. Yes it is business but he won't see it after awhile.

I think we have all thought about trying this one at one time or another but I don't think it is worth it. If it all goes amazingly well then yes it works. When it falls around your ears the fall out isn't worth thinking about. Could have you being walked if he causes a fuss etc.

**blinko** · 16 February 2012, 17:16

you could always charge a one of fee for introduction, the acting as a recruitment agent opens up loadsa cans of worms. Both legal and social.

**Sausage Surprise** · 17 February 2012, 08:20

Done it once before and the paperwork is ridiculous. I wouldn't bother personally.

Recruiting Via Ltd Company