Reply to: IT one person Contract to Managed Service Contract

[NoviceContractor]

Agreed.

IPSE can only give you generic advice. A commercial firm can read your contract thoroughly and give you specific advice.

Any recommendation?

[SueEllen]

I suggest you get a 2nd opinion from a commercial firm. Nothing against IPSE but they're quite specialist and also risk-averse as you have a form of insurance with them.

Agreed.

IPSE can only give you generic advice. A commercial firm can read your contract thoroughly and give you specific advice.

[northernladyuk]

I suggest you get a 2nd opinion from a commercial firm. Nothing against IPSE but they're quite specialist and also risk-averse as you have a form of insurance with them.

Agreed. It's like accountants who give you cautious advice because they don't want the liability.

I really would look into keeping your current Ltd open for contracting and opening a new Ltd for the managed service contract.

[Lance]

I have spoken to IPSE Legal team and they are of the opinion that I can not work with the client directly for this new arrangement too until the 6 months are passed (as per the clause from my current contract).

I suggest you get a 2nd opinion from a commercial firm. Nothing against IPSE but they're quite specialist and also risk-averse as you have a form of insurance with them.

[northernladyuk]

Hi All,

I am working for a client for last 5 years via an agency working through my LTD company on a daily rate. My current contract expired 2 weeks back. I have now moved to managed service business and have few employees in my company. I plan to engage with my last client for work which is different to what I have been doing and in a different contract. It will be managed service contract and my company will serve the client on adhoc basis - as and when needed. Since it is managed service contract so I need to sign the contract T&C directly with the client and I can not have any agency in between. I will be bidding for each work separately and the billing to the client will vary from one piece to another.

My contract that expired last week prevents me or my LTD company for working directly with my client for 6 months. How do I come out of this clause to have contract directly with client for managed services?

Really appreciate any help/ guidance I can get on the forum.

Thanks.

I have spoken to IPSE Legal team and they are of the opinion that I can not work with the client directly for this new arrangement too until the 6 months are passed (as per the clause from my current contract).

I know the old man has mentioned corporate veil, but did you check with IPSE legal team whether you can set up a new company to contract direct?

[northernladuk]

I have spoken to IPSE Legal team and they are of the opinion that I can not work with the client directly for this new arrangement too until the 6 months are passed (as per the clause from my current contract).

Interesting. I'm surprised but they will have more detail that doesn't contradict and they are experts so guess that's that.

[NoviceContractor]

This ^^^^^^^
Get the legal advice, and think about starting a new LTD with no ties to the agency. If you're putting other staff onsite then you are a competitor of the agency so having no history with them would be helpful.
The only lever the agency then have is against you personally and if you are setting up a genuine business then they would struggle to make it stick.

I have spoken to IPSE Legal team and they are of the opinion that I can not work with the client directly for this new arrangement too until the 6 months are passed (as per the clause from my current contract).

[northernladuk]

I probably wouldn't even bother changing the company unless there is a good business reason. Then can still come after you as it's a sham arrangement. It's called piercing the corporate veil. It should stop people like damp courses offering guarantee and then folding the company to get away from the obligation. It's just too expensive and complicated for your average bod to chase.

[Lance]

From what you've said I wouldn't bother. I'd be speaking to a contract lawyer just to get their opinion as to whether the handcuff will stick or not first.

This ^^^^^^^

Don't tell the agent diddly squat.
a) it's only their business if you are intending to breach the contract you have with them, and you're trying to avoid that
b) they will cause trouble and not help in the slightest
It's none of their business.

Get the legal advice, and think about starting a new LTD with no ties to the agency. If you're putting other staff onsite then you are a competitor of the agency so having no history with them would be helpful.
The only lever the agency then have is against you personally and if you are setting up a genuine business then they would struggle to make it stick.

[northernladuk]

What relation IR35 has here? This will be managed service contract and I will have few workers from my company supporting the client along with my self. I will be serving other clients too at the same time.

Yeah but you've still got 5 years of risk hanging over your head. They say IR35 isn't directly related to time but I'd say in a large majority of cases people don't keep their eye on the ball and make it a risk.

[northernladuk]

The agent will not get any new business from the client in future and the client is not willing to make any false promise as the client is no longer looking to take any Contractor on board in UK. In fact, they never took anyone else in last 5 years other than me.
The client is not willing to talk to the agency. They have left it for me to sort out. If I want business from the client than I need to work out with the Agency myself. The client has many other suppliers for Managed Services so they are not really bothered much. Its me who is trying to generate some business here.

So if the agency isn't going to make another penny then the handcuff won't stand. You are all clear as far as I can see.

The Agent will of course loose money as the client will pay me directly. So I do not want any arrangement without the agency agreeing to come out of it.

You've just said the agency won't make any more money and now you say the agency will loose [sic]. I wish you'd make your mind up or get a better understanding of your situation.

You are right. I am trying to understand how I can deal with this situation. I have not spoken with the Agency yet but will do it today.

From what you've said I wouldn't bother. I'd be speaking to a contract lawyer just to get their opinion as to whether the handcuff will stick or not first.

[NoviceContractor]

How much do you know about IR35 by the way?

What relation IR35 has here? This will be managed service contract and I will have few workers from my company supporting the client along with my self. I will be serving other clients too at the same time.

[NoviceContractor]

So tell the client to contact the agency saying they want you to work for them now. If the agent wants any more business from the client they'll forget the handcuff. If the agent knows he's not losing any money anyway he'll fold faster than a pack of cards.

The agent will not get any new business from the client in future and the client is not willing to make any false promise as the client is no longer looking to take any Contractor on board in UK. In fact, they never took anyone else in last 5 years other than me.
The client is not willing to talk to the agency. They have left it for me to sort out. If I want business from the client than I need to work out with the Agency myself. The client has many other suppliers for Managed Services so they are not really bothered much. Its me who is trying to generate some business here.

You get the client to do it for you with any future business on the line.

When you say bypass them that would indicate to me they have a sniff at the work. You need to be super clear here as this is what it all hinges on. If the agent won't lose any money with your new setup then handcuff will not stand. If you are indeed taking money out of their pocket the handcuff is as solid as a rock.... Unless the client can strong arm then.

The Agent will of course loose money as the client will pay me directly. So I do not want any arrangement without the agency agreeing to come out of it.

I'm not sure if it's just not coming over in your posts but it sounds like you don't really know or are trying to understand the full situation so are losing the upper hand.

You are right. I am trying to understand how I can deal with this situation. I have not spoken with the Agency yet but will do it today.

[northernladuk]

How much do you know about IR35 by the way?

[northernladuk]

Thanks northernladuk.

I have good terms with the Agency owner. I have managed to bring down their commission previously from 20% to 10% and in a not so recent chat he has shown willingness to go further down but not willing to let me go.

I'm not bloody surprised they won't let you go. They've pulled your pants well and truly down with the 20% and even though you know what the client is paying you are happy to let them take 10% for 5 years? They must be laughing their tits off.all the way to the champagne bar.

The client will not engage with me directly until the Agency let me go and the client does not want to work with me in managed services contract basis if there is anyone in between as this is not how the Managed Services Contract works. There are SLAs and Financial Penalties that I will be directly liable for and no agency will be willing to take that risque.

So tell the client to contact the agency saying they want you to work for them now. If the agent wants any more business from the client they'll forget the handcuff. If the agent knows he's not losing any money anyway he'll fold faster than a pack of cards.

My only concern is that how do I convince the agency to come out of it and not think that I might still be doing contracting with the client by the disguise of Managed Services Contract. I am not in a position to pay anything to agency to let me go as I do not know how much I will make with the client as it will be adhoc work. I will certainly be not making as much as I was making earlier. I will be surprised if I made even 50% of it but how the agency will be convinced that I am not trying to bypass them?

You get the client to do it for you with any future business on the line.

When you say bypass them that would indicate to me they have a sniff at the work. You need to be super clear here as this is what it all hinges on. If the agent won't lose any money with your new setup then handcuff will not stand. If you are indeed taking money out of their pocket the handcuff is as solid as a rock.... Unless the client can strong arm then.

I'm not sure if it's just not coming over in your posts but it sounds like you don't really know or are trying to understand the full situation so are losing the upper hand.