Reply to: Commision on a Contract

[SimonMac]

https://www.gov.uk/anti-bribery-policy

[tpsman]

https://www.gov.uk/anti-bribery-policy

[northernladuk]

Most clients I've worked with have a clear policy about NOT taking money from suppliers. Indeed, I've worked in places where the client brought criminal charges against employees who took a "commission" in this way.

As others have said, the going rate for commission is a pint of beer.

Or a lager shandy/gin & tonic if it is a southern gig.

[Wanderer]

Tell him if its commission he wants then he should be billing the client and you will bill him. My bet is the client have no idea what he is up to.

Most clients I've worked with have a clear policy about NOT taking money from suppliers. Indeed, I've worked in places where the client brought criminal charges against employees who took a "commission" in this way.

As others have said, the going rate for commission is a pint of beer.

[psychocandy]

Dodgy dodgy dodgy...

Theres doing someone a favour and then you taking them out for a few beers and then theres fraudulantly taking 20%.

Imagine if client finds out? Cant seem them being happy that you got the gig only because one of their employees was being bribed with 20%. I imagine you;d be be out on your arse at best, in court at worst.

[moggy]

Sounds to me that this guy sees himself a a bit of a part time agent.

Tell him if its commission he wants then he should be billing the client and you will bill him. My bet is the client have no idea what he is up to.

[BlasterBates]

Tenuously related question but how close to the wind are you sailing if you are in a contract at a client and said client has asked you to build a team. In the process of doing that you setup a ltd co to act as an agency and bring on people through that company, pocketing a margin off everyone you push through that route.

I don´t see any problem with this at all. It is perfectly legal. It would be polite obviously to inform the client and he may take execption if he wasn´t informed. If the client didn´t want you to take commission in my view he´d have to inform you and amend your contract

You are in a business to business relationship with the client. If the client asked a consultant from KPMG to build a team KPMG would definitely take commission and they wouldn´t talk to the client about what that commission was, unless there was a contractual clause stipulating the margin.

[TheFaQQer]

Tenuously related question but how close to the wind are you sailing if you are in a contract at a client and said client has asked you to build a team. In the process of doing that you setup a ltd co to act as an agency and bring on people through that company, pocketing a margin off everyone you push through that route.

If the people you are bringing in are known by you, then I don't see this as any difference from getting them to apply through an agency and someone else taking the commission when you hire them.

If you are hiring people that you don't know anything about, then I'd be more concerned with the hassle of dealing with them, paying them before you get paid / factoring invoices, running a new company, getting that company onto the books with the client, and making sure that they were any good than it would be worth.

[northernladuk]

Tenuously related question but how close to the wind are you sailing if you are in a contract at a client and said client has asked you to build a team. In the process of doing that you setup a ltd co to act as an agency and bring on people through that company, pocketing a margin off everyone you push through that route.

Well for a start you are probably not on the PSL so that won't work. If you can get the right people on for the price they want to pay I wouldn't have thought it to be out of the question but if they are paying for £350 people and you do the typical agency thing and bring £200 people in you are up tulip creek as well. You also have to look after these guys and are responsible for them as well so usually more effort that it is worth as well.

[fckvwls]

Tenuously related question but how close to the wind are you sailing if you are in a contract at a client and said client has asked you to build a team. In the process of doing that you setup a ltd co to act as an agency and bring on people through that company, pocketing a margin off everyone you push through that route.

[Geekman]

Thanks

Thanks a bunch for all the advices. To answer the main questions:
1> Yes the person is an employee of my to-be-client (if I take the contract)
2> This arrangement is completely "off the records" and a private arrangement between me and the person hence showing the expense as "commission" doesn't look possible.

Overall, from all your responses, clearly it is illegal and dangerous hence will try and do it legally or not take the contract. Thanks again for your advices, were indeed helpful!!

[DaveB]

Dear all,

Sorry, asking a rather delicate question here -
I am likely to get a contract (will be outside IR 35) however the person who is offering me the contract is an employee of the firm and the person is asking for a 20% commission on the earnings, so I will get 80%. Is this something done elsewhere? (I would have thought so). What's the best way of doing it so there is minimal risk, from legal, HMRC and the firm point of view, a few options could be:

1> The person's spouse (not working) could become a share holder/employee of the limited company and gets 20% worth of salary and dividend

2> Limited company is formed by only me. The other person's spouse sets up another limited company and my company pays some sort of expenses (website maintenance, training etc) to the spouse's company. But the expense amount being high (about £20,000 a year), I guess could cause troubles from HMRC.

Please help me if this is too risky and I should just not go down this route or this is being done in the market and one of the above or any other way is a way to do that?

I would be grateful for your quick response. Many thanks in advance!

Regards,
Geekman

No. No, no, no. This is NOT normal in the contracting market, it does not happen elsewhere (not in public anyway).

As other have said this is basically him asking for a kickback on the contract. This is illegal. It will land both you and him in deep tulip if you get caught out. Prison time on conviction deep.

Do you have anything concrete in terms of evidence or has this all been off the record discussions?

I would shop him to his corporate HR and Legal people and walk away. Doing anything else is going to get you tarred with the same brush.

[ensignia]

20% commission? I would, in no uncertain terms, tell them to **** off.

[Contreras]

Dear all,

Sorry, asking a rather delicate question here -
I am likely to get a contract (will be outside IR 35) however the person who is offering me the contract is an employee of the firm and the person is asking for a 20% commission on the earnings, so I will get 80%. Is this something done elsewhere? (I would have thought so). What's the best way of doing it so there is minimal risk, from legal, HMRC and the firm point of view, a few options could be:

1> The person's spouse (not working) could become a share holder/employee of the limited company and gets 20% worth of salary and dividend

2> Limited company is formed by only me. The other person's spouse sets up another limited company and my company pays some sort of expenses (website maintenance, training etc) to the spouse's company. But the expense amount being high (about £20,000 a year), I guess could cause troubles from HMRC.

Please help me if this is too risky and I should just not go down this route or this is being done in the market and one of the above or any other way is a way to do that?

I would be grateful for your quick response. Many thanks in advance!

Regards,
Geekman

It seems unlikely that the commission arrangement has been sanctioned by the company.

If this was in any way legal then you wouldn't need to invent artificial arrangements to 'launder' the money. It would just be entered in the books as Commission and your cohort would take care of their own tax affairs.

That means what you are considering together is conspiracy to defraud. You would benefit from the contract earnings so, whether you intended it or not, you are part of the conspiracy (already).

Think about this - conspiracy to defraud and money laundering are covered by the Proceeds of Crime Act. Apart from a criminal record, and a possible jail term, you could see _all_ your assets seized until you were able to prove the assets were earned lawfully.

[kingcook]

However I don't see why you're jumping through hoops to help this bloke out. If he fancies himself an agent, he really should be sorting out his own legal and tax affairs, and you certainly shouldn't be pretending the money is for something other than what it is.

Good advice. The other person's tax affairs are not your problem. Don't piss around making them or their spouse a shareholder of your company. If you think you're doing a favour for this person, consider the "favour" they are doing by charging an extortionate rate of commision.