Reply to: Agency in administration - Coal IT

[DeadEyedJacks]

If you do cash accounting, whether on the flat rate scheme or standard scheme, then you don't pay any VAT.

If you don't then you get a VAT refund.

Btw there are some accountants who are unaware there is a cash accounting scheme for the flat rate scheme.

Yeah, mine included...
Six months wait for VAT refund on December bad debt.

Now off FRS and on standard VAT cash accounting, so lesson learned on that one.

[SueEllen]

What happens with things like VAT in this scenario? I assume our ltd's would get a refund if VAT returns generate VAT based on invoice.
Also wonder what would happen if inside IR35 in the public sector? If those who still take those contracts are to be treated and taxed similar to perms then surely part of that should be to make sure we're "fairly" paid even if the agent goes bust! Wishful thinking I bet....won't be able to pay our "fair share" of taxes if we don't receive the cash

If you do cash accounting, whether on the flat rate scheme or standard scheme, then you don't pay any VAT.

If you don't then you get a VAT refund.

Btw there are some accountants who are unaware there is a cash accounting scheme for the flat rate scheme.

[SuperZ]

What happens with things like VAT in this scenario? I assume our ltd's would get a refund if VAT returns generate VAT based on invoice.
Also wonder what would happen if inside IR35 in the public sector? If those who still take those contracts are to be treated and taxed similar to perms then surely part of that should be to make sure we're "fairly" paid even if the agent goes bust! Wishful thinking I bet....won't be able to pay our "fair share" of taxes if we don't receive the cash

[DeadEyedJacks]

the lesson to be learnt from things like this is if any agency asks you to work for excessive payment terms tell them no. I consider working a month an then having to wait for more than 7 days at the end of the month to be excessive.

I always insist on weekly pay and 7 day terms and if I have to work monthly it will only be for one of the big recruitment agencies who have been around for a long time with a big client.

Agencies who ask you to work a month and then wait another 2 or 3 weeks at the end of the month for payment need a reality check, would they be prepared to give you £20,00 worth of credit, not a chance so why are they asking us to do this for them

Good luck with getting 99% of agencies to agree to your payment terms..

[DeadEyedJacks]

Jade Global same people who wanted to takeover Chelmsford City football club?
Chelmsford City's takeover by the Jade Global Group is off, members' meeting hears | Essex Live

Lots of companies with similar names and history of phoenixing every few years.
https://beta.companieshouse.gov.uk/search?q=jade+global

Like you said, needs someone to investigate further.
None of which will get the unsecured creditors, aka contractors their money back.

[JohnM]

the lesson to be learnt from things like this is if any agency asks you to work for excessive payment terms tell them no. I consider working a month an then having to wait for more than 7 days at the end of the month to be excessive.

I always insist on weekly pay and 7 day terms and if I have to work monthly it will only be for one of the big recruitment agencies who have been around for a long time with a big client.

Agencies who ask you to work a month and then wait another 2 or 3 weeks at the end of the month for payment need a reality check, would they be prepared to give you £20,00 worth of credit, not a chance so why are they asking us to do this for them

[Rabotnik]

Administrators report has now been circulated to creditors.

A creditors meeting will occur shortly.

There's a big black hole in the finances...

I read it and it actually strengthens my personal theory on what went down there (pure speculation of course). In May 2015 they were bought by a construction company called Jade Global after they went into administration. Jade Global had only been in existance for 5 months, so why would a construction company suddenly want to buy a recruitment agency after only being in operation for such a short time? My guess was to run a scam through the agency, and the administrators description of what happened backs that up I think.

Soon after they bought Coal IT, they "offered" to put about 50 of their contractors through their books, and Coal IT agreed. Coal IT then requested a credit increase with Beebi (spelling might be wrong), their invoice discounter, to pay for all these contractors. After a few months it became apparent that the clients of the Jade Global contractors were not paying Coal IT, so Beebi sent in administrators to monitor what was going on at Coal IT. In January this year a bunch of clients dropped Coal IT since they weren't paying their contractors so this forced Coal IT into administration. At this point they still owe Beebi £2M with total debts of £3M.

My theory is Jade Global used Coal IT as a vehicle to rip off Beebi. They created 50 "ghost" contractors who would raise maybe £10K in invoices each, totalling £500K which Coal IT would then request Beebi to pay. By the time Coal IT realises the clients aren't paying them it could be 2 or 3 months in, by which point Beebi would have already paid out over £1M. The whole thing is made easier if Coal IT was colluding with them and not verifying the invoices were approved by the client(s). So basically they tried to milk Beebi for as long as possible.

Like I said, this is just my theory with no evidence, but I find it highly suspicious that a new construction company would buy a failed recruitment agency and then it just happens to turn out that 50 contractors they put through them turn out to have non-paying client(s).

[DeadEyedJacks]

Coal IT In Liquidation

Administrators report has now been circulated to creditors.

A creditors meeting will occur shortly.

There's a big black hole in the finances...

[thelastrosbif]

My first agency back when I started, seemed alright but outside of contact it's always been nearly impossible to get hold of them. Now it makes sense... they'd already fled to the Bahamas [emoji38]

[northernladuk]

Which is £3k more than the nothing you would have otherwise...

Judging by the number of people that have IPSE membership on here and at clients I've been on I'm sure he'll get more than 3k...

[malvolio]

Having read that - the maximum paid out in the event of the failure of any one agency is £150k. So potentially, if more than 15 IPSE+ members are affected, then the payout would be less than £10k. As its own example shows, 50 IPSE+ members and only £3000 gets paid out.

Which is £3k more than the nothing you would have otherwise...

[chopper]

IPSE+ covers you for agencies going bump but I doubt it's anywhere near the potential if you are on monthly cycles. Still takes the sting out of the tail.

Actually here it is..

https://www.ipse.co.uk/about-us/busi...ption-services

10k net of VAT

Having read that - the maximum paid out in the event of the failure of any one agency is £150k. So potentially, if more than 15 IPSE+ members are affected, then the payout would be less than £10k. As its own example shows, 50 IPSE+ members and only £3000 gets paid out.

[malvolio]

Although almost all such rules are PS or manpower replacement for PS clients so perhaps not all that wonderful from now on...

Also transfer of clearance bertween roles is not guaranteed

[RonBW]

Don't forget to join using the link below to thank me

Or given where we are, you could click on the advert and get a discount on membership instead.

[northernladuk]

It is a shame I did not know about IPSE and had never thought asking this question although I had that strong bad feeling for the agency from the beginning. I had a lesson to learn. Thanks for the info northernladuk.

Don't forget to join using the link below to thank me

https://www.ipse.co.uk/join/IPSEMGM1094