Recommend a lawyer

[Lance]

I take it the end client is public sector?
Looks like Redrock are basically allowing public sector clients to still get outside IR35 contractors.

The individual part of this agreement only makes sense if the agency think you're going to F them in A by disposing of the company.
The transfer of liability is likely not enforceable for all those clauses but could become a headache.
It's certainly not usual.

I agree with Perfect Storm. Make sure the end client is aware, and push the agency hard. It might get you nowhere as HR/procurement might have made their mind up. At that stage you'll need to accept it or walk.

In reality this is unlikely to ever be a problem. The agency are just being ultra nervous.
To be very clear. The limited liability that a company provides is around your protection from creditors if it goes pear-shaped. So for almost all of us it offers no real protection as we don't borrow money.

[ladymuck]

Maybe pop a review up on Off Payroll as they currently only have one positive review that's a year old. Won't help you sort out the clause but it's good to warn others.

https://www.offpayroll.org.uk/agents...k%20Consulting

[rascal]

It seems a bit odd that your client has put an agency in the loop as some kind of IR35 mitigation when it doesn't at all absolve them of their responsibilities.

I think they used an agency for convenience, but the agency is stripping away all the protections offered by a limited liability company by forcing you to sign the agreement shown above, essentially making you self-employed.

Apparently they got stung by a contractor who closed his company to avoid some contractual obligation, and this is their solution.

[ladymuck]

It seems a bit odd that your client has put an agency in the loop as some kind of IR35 mitigation when it doesn't at all absolve them of their responsibilities.

[rascal]

Who is the agency?

The agency is Redrock (Bristol).

Here is the full text of the document. They insist that you sign it whether you are operating as a limited company, or through an umbrella. They will not let you start a contract without signing it, and as they act as single supplier for a number of end clients, you effectively cannot work for those end clients without agreeing to it.

Consultancy agreement

In consideration of Redrock Consulting agreeing to enter into the consultancy agreement (Agreement) with ABCD Limited (Consultant Company) of today's date, I hereby agree the following:

1. I warrant that the Consultant Company is and shall at all times be entitled to enter into the Agreement and make available my services to the Client in accordance with the terms of the Agreement.

2. I agree that I shall procure that the Consultant Company shall at all times duly observe and perform the obligations contained in the Agreement (including compliance with any relevant policies or procedures of the Client) and I undertake to indemnify the Client on demand in respect of any loss, liability, costs (including reasonable legal costs), damages or expenses it may suffer as a result of any failure by the Consultant Company to perform those obligations.

3. Notwithstanding paragraph 2, and without prejudice to any rights the Client may have against the Consultant Company, I agree that, if I cease to be employed by the Consultant Company or the Consultant Company ceases to exist or otherwise fails or is unable to duly observe and perform its obligations under the Agreement, I shall observe and be bound by each and all of the terms of the Agreement as if I were a party in place of the Consultant Company.

4. I undertake that I shall look solely to the Consultant Company for all compensation for any services to be performed by me under the Agreement.

5. I undertake and agree with the Client that the terms of [clause x (Confidential information)], [clause x (Data protection)] and [clause x (Intellectual property)] of the Agreement apply as if they are direct undertakings and agreements between us.

6. Without prejudice to the foregoing I hereby agree that for a period of six months following the termination of the Agreement, I will not directly or indirectly and whether myself or by my agent(s) or servant(s) solicit accept or undertake work of a similar nature to the Services for any Customer of the Client to which I or the Consultant Company has carried out services pursuant to the Agreement, or to any party, which can reasonably be viewed as arising as a result of the provision of the Services.

7. I undertake that no breach by the Consultant Company of any of its obligations to me shall constitute or be deemed to constitute a breach by the Client under the Agreement. Accordingly, notwithstanding any such breach by the Consultant Company, I undertake to fulfil all of my obligations under this letter and as envisaged by the Agreement if and for so long as the Client fulfils its obligations to the Consultant Company.

[PerfectStorm]

You're at the point where you have leverage - an agency will move heaven and earth to get their commission and not upset a client if they think they have a done deal. Use your leverage.
Message the end client as well (LinkedIn if you have no contact details) to say why, not in a snotty way just "waiting for them to sort out the paperwork !" then they'll get it from both ends.

Show you're serious about walking away from what is a serious exposure on your part.

[Old Greg]

My personal opinion... Danger.. Do not sign, its a trap.

So you're signing a separate contract between your LTD and the agency? If yes, great. Thats all you need.

But signing something between you personally and the agency is questionable at any time. And signing something that asks you 'personally' to indemnify the agency against losses caused by your business is just, unbelievable. Why would you do that?

That is basically putting your savings, house, car and any other assets up for grabs if something goes wrong during the contract.
This is what business insurance is meant to be for.

As said previously, this piece of paper undermines the benefit of limited liability you gain by operating through your company.

Get a lawyer to confirm if you need to, but I would just toss this in the bin.

I've used Egos many years ago and were pretty good.

Agreed that this doesn't need a lawyer.

[WTFH]

Who is the agency?

[CheeseSlice]

My personal opinion... Danger.. Do not sign, its a trap.

So you're signing a separate contract between your LTD and the agency? If yes, great. Thats all you need.

But signing something between you personally and the agency is questionable at any time. And signing something that asks you 'personally' to indemnify the agency against losses caused by your business is just, unbelievable. Why would you do that?

That is basically putting your savings, house, car and any other assets up for grabs if something goes wrong during the contract.
This is what business insurance is meant to be for.

As said previously, this piece of paper undermines the benefit of limited liability you gain by operating through your company.

Get a lawyer to confirm if you need to, but I would just toss this in the bin.

I've used Egos many years ago and were pretty good.

[rascal]

Apart from anything else they strip away the protection of your company's limited liability as well as any claim to be a supplier of services.

Those are my thoughts exactly.

I also had concerns around this piece, especially with regard to IR35 and professional insurances.

... I shall observe and be bound by each and all of the terms of the Agreement as if I were a party in place of the Consultant Company

[Old Greg]

In return, ask the Agency or Client Director for a personal guarantee of invoice payment.

Seriously though, I wouldn't accept this. If they don't like dealing with limited liability companies they shouldn't.

[rascal]

To my mind, this is exactly the sort of thing that the IR35 assessment would pick up. They'd usually suggest changing "I" to "Company LTD".
And this isn't being petty either - 'I' wouldn't be covered by your professional insurances, so it's in their interests to correct.

Thanks for your reply.

I should point out that there are two documents governing this contract.

1. The main contract between the limited company and agency for services to the end client.
2. This supplementary contract between myself and the agency, which I have described here.

With the second document, the agency are not willing to change the "I" to "Company Ltd". They actually want this contract to exist between their agency and me personally.

[malvolio]

You could ask Merkel Tax, who review the whole contrac, not just the IR35 bits.

But on the face of it I wouldn't accept those conditions. Apart from anything else they strip away the protection of your company's limited liability as well as any claim to be a supplier of services.

[PerfectStorm]

To my mind, this is exactly the sort of thing that the IR35 assessment would pick up. They'd usually suggest changing "I" to "Company LTD".
And this isn't being petty either - 'I' wouldn't be covered by your professional insurances, so it's in their interests to correct.

The "I" contract sometimes comes into play for something like an IT policy and NDA.

Simple IR35 review and bullet point your changes.

[rascal]

Having looked through previous posts, I haven't been able to find any other examples of this.

In order to contract with an end client, the agency wants me to sign a separate document (consultancy agreement) as an individual, and not as a limited company director. For the most part, it reaffirms the terms under which the limited company will operate with respect to providing services to the end client, but it also contains the following interesting clauses:

2. I agree that I shall procure that the Consultant Company shall at all times duly observe and perform the obligations
contained in the Agreement (including compliance with any relevant policies or procedures of the Client) and I
undertake to indemnify the Client on demand in respect of any loss, liability, costs (including reasonable legal costs),
damages or expenses it may suffer as a result of any failure by the Consultant Company to perform those obligations.

3. Notwithstanding paragraph 2, and without prejudice to any rights the Client may have against the Consultant Company,
I agree that, if I cease to be employed by the Consultant Company or the Consultant Company ceases to exist or
otherwise fails or is unable to duly observe and perform its obligations under the Agreement, I shall observe and be
bound by each and all of the terms of the Agreement as if I were a party in place of the Consultant Company.

Note that the agency is the Client in this agreement.

The explanation I've had from the agency for this agreement has been less than satisfactory. I've also spoken to the end client and they know nothing about it, only being aware of the contract between themselves and the agency. I've tried contacting the usual legal companies advertised on here, but they will only offer IR35 assessments. This needs a more specialised legal opinion, so if anyone has any recommendations please let me know.

For what it's worth, I've worked for the end client before and they know me well. They introduced this agency as a result of the IR35 changes that were due to go live in April this year.

The lack of threads on this subject suggests this is something specific to this agency. In many years of contracting, I've never seen anything like this before that seeks to circumvent the limited company contractual position and seek personal guarantees from the contractor.