Reply to: How can I remain self employed when dealing with agencies

[d000hg]

Maybe an attitude re-think might actually be in order. You never know, actually doing what every single one of us has done might actually work!

That's a stupid answer. Thousands and thousands of freelancers work self-employed.

[JonSmile]

This spreadsheet and video does the maths for you.

Phil

nice spreadsheet, shame i did not come across it a couple of years ago when I was crunching the numbers. glad to say that I got the same result though

[THEPUMA]

To clarify, ITEPA CH 7 in practise means what has been suggested ie that agencies won't take you on as self-employed. In theory they could do, based on the exception for professional workers who are not controlled (see http://www.hmrc.gov.uk/manuals/esmmanual/ESM2011.htm) but in practise not many agencies are prepared to take this risk, other than those who are oblivious to it, which is more common than you might expect.

[Alan @ BroomeAffinity]

Saigon Triumph and Stevo Kane. Are you the same people? Only people ever to mention Mitsu Ltd and both do so on the same day?

Stevo on one thread you recommend Mitsu and on another you are looking for recommendations for a solution remarkably similar to Mitsu and then Stevo comes along ans recommends them.

[saigon triumph]

Thanks

Hey thanks to everyone for the advice. i have actually found another option that allows me to remain self employed while dealing with all the rules the agent sets up. I guess we will soon turn into an over beauracratic society. if we are not already there. But thanks again for all the tips

[malvolio]

As I understood it if you're under your own or an umbrella company you are effectively a supplier, as opposed to an employee of the agency you are contracting with (as such).

Close, but no banana.

You have three practical choices - PAYE employee of the agency (expensive and limiting), employee of an umbrella (more expensive but less limiting) or own your own company (not expensive and not limiting).

However if clients treated us as suppliers, rather than as temp employees, we would all be a lot better off.

[Opportunity Knox]

As I understood it if you're under your own or an umbrella company you are effectively a supplier, as opposed to an employee of the agency you are contracting with (as such).

[Ardesco]

ITEPA 2003 Chapter 7 says otherwise - in simple terms it requires agencies to pay their "workers" as employees - so that means the worker using their own limited company, an umbrella, or a direct employee of the agency.

Virtually any other business model does have the choice of employee or self employed depending on the "badges of trade", but specific legislation has been enacted to stop agencies paying their workers on a self employed basis.

Ardesco

With respect the post mentioning ITEPA Ch 7 is entirely correct and a very valid point.

The answer was given in respect to a question that was why act agencies have self employed workers.

You are indeed an employee of your own Limited Company, which an agency can contract with under this legislation.

stevo kane

There are three valid alternatives. Ltd Co ( Yours ) , Umbrella or PAYE with an agency. This spreadsheet and video does the maths for you. but running your own company isnt just about the money, its adviseable to think carefully if you really want to run your own business !

Phil

I have no doubt that agencies have to pay their workers as employees. However the point remains that if you have your own company you are not their worker. It doesn't matter if you are LTD, LLP, Sole Trader, partnership, whatever, you are still not their worker, you are a company who happens to have a contract with them.

As stated previously the reason that agencies don't like sole traders is because HMRC started going after the last registered legal entity who they could prove had funds if no tax was ever paid on those funds. As a sole trader there is no legal requirement to register your company name any more so HMRC found it almost impossible to go after sole traders so to make life easy for themselves they just went after the company who paid the sole trader.

Sole traders are perfectly capable of having contracts with other companies (it's how the whole building industry works).

[d000hg]

Maybe an attitude re-think might actually be in order. You never know, actually doing what every single one of us has done might actually work!

That doesn't change the fact it's a stupid system. Many individuals work as sole traders, freelancers especially... but agencies simply aren't interested in this setup so as already said, either do what they require or don't use agencies.

[PhilAtBFCA]

Ardesco

With respect the post mentioning ITEPA Ch 7 is entirely correct and a very valid point.

The answer was given in respect to a question that was why act agencies have self employed workers.

You are indeed an employee of your own Limited Company, which an agency can contract with under this legislation.

stevo kane

There are three valid alternatives. Ltd Co ( Yours ) , Umbrella or PAYE with an agency. This spreadsheet and video does the maths for you. but running your own company isnt just about the money, its adviseable to think carefully if you really want to run your own business !

Phil

[Ardesco]

ITEPA 2003 Chapter 7 says otherwise - in simple terms it requires agencies to pay their "workers" as employees - so that means the worker using their own limited company, an umbrella, or a direct employee of the agency.

Virtually any other business model does have the choice of employee or self employed depending on the "badges of trade", but specific legislation has been enacted to stop agencies paying their workers on a self employed basis.

What a load of tosh. They may have to employ their worker but I do not work for an agency I work for my company. If an agency wants to provide my company with a contract to perform a function that they cannot fulfil themselves that is their choice and there is no legal requirement for me to structure my company in a specific way for them to have a contract with my company!

I think you have got yourself mixed up with temp legislation, something that happens a lot in this industry and part of the reason why agents come out with so much utter tulipe.

[stevo kane]

You are joking right?

Unless it is unusually complicated for you because, for example, you have been banned from being a Company Director because of previous misdeeds.

look i just want to find an alternative solution to setting up a company as i am not good of keeping track of paperwork and all that kind of stuff. I am sure there must me one out there. And no i have not been banned from being a director.

[sweetandsour]

I don't really want to set up my own limited company (too much hassle)

You are joking right?

Unless it is unusually complicated for you because, for example, you have been banned from being a Company Director because of previous misdeeds.

[centurian]

(too much hassle)

Come to the wrong place for sympathy mate

[kaiser78]

... I don't really want to set up my own limited company (too much hassle) or use an umbrella (i won't earn any money). Does anyone have a solution ?

If you see setting up a limited company as too much hassle then respectfully, you probably shouldn't be contracting and maybe take the easy option permie route.