Some advice please

[Ravello]

I see your point, but as a contractor surely we have as much of a right to subcontract as an agency would?

Depends on your contract, but assuming there is provision for this then yes.

The contractor is giving a 40% reduction due to it being project work and not bespoke consultancy (I am doing all the consulting, application design and providing blueprints, functional specs etc.).

Fair enough from his point of view, what are the client's expectations though if they're happy to pay the additional 40%? Not something you need to answer just something to consider.

I do like the idea of splitting the 40% both ways, although I can see this overcomplicating things, unless he bills the company and gives me a 20% finders fee - this is something that could work.

The percentage allocation shouldn't make a difference to the way in which the billing is set up. I'd suggest that you invoice the client for 100% of his work, hisco then invoices yourco for 80% of the value of his work. You have a contract in place with the client for provision of hisco services and subsequently a further contract with hisco which reflects the contract yourco holds with the client. In particular you would be best advised to reflect the payment terms from the client unless you're happy to provide the factoring service that many agencies do.

I'd also suggest that in order to put this in place you thoroughly review the contract you have with the agency. As others have said, I wouldn't ask the agency as their response is almost a foregone conclusion. Look for exclusivity terms and anything that denotes service provision, restrictions on direct engagement with client etc.

[Amiga500]

Which is exactly what we all complain about when agencies do it. The fact that he is working from home is clearly not dependent upon the rate as you have quoted the full rate to the client.

If it's easier for the client for him to be sub-contracted via you, why not explain that to the contractor, offer to split the 40% between the 2 of you and explain that this is based upon the additional admin for yourco? It might actually be beneficial to you in the long run, as it will certainly save any aggravation if the other guy finds out, equally, he might be happy to do something similar in the future...

I see your point, but as a contractor surely we have as much of a right to subcontract as an agency would?

The contractor is giving a 40% reduction due to it being project work and not bespoke consultancy (I am doing all the consulting, application design and providing blueprints, functional specs etc.).

I do like the idea of splitting the 40% both ways, although I can see this overcomplicating things, unless he bills the company and gives me a 20% finders fee - this is something that could work.

[Ravello]

Thanks for the advice everyone, from the responses I can see that it is not entirely straightforward.

It should just be 31 days of work and the client has said they are happy for me to bill them directly (via LTD co).

The dev does not know about the 40% of course, but I am giving him what he asked for in his quote and have neogtiated for him to work from home (pretty good gig for him I think).

I like the idea of a finders fee, but how would that work legally etc. Would I ask him for it up-front? How much would I ask for?

Thanks.

Which is exactly what we all complain about when agencies do it. The fact that he is working from home is clearly not dependent upon the rate as you have quoted the full rate to the client.

If it's easier for the client for him to be sub-contracted via you, why not explain that to the contractor, offer to split the 40% between the 2 of you and explain that this is based upon the additional admin for yourco? It might actually be beneficial to you in the long run, as it will certainly save any aggravation if the other guy finds out, equally, he might be happy to do something similar in the future...

[Ravello]

and we slag off agents on here for trying to get a good mark-up!

WHS. If the other contractor is offering a 40% discount there's presumably a reason why. I don't know if it's because he's desperate for the gig or thinks he's doing you a favour or just wants to get a foot in the door.

Either way, if the client is prepared to pay the additional 40% I'm pretty convinced you're not doing him any favours by sub-contracting him via your Ltd for a 40% fee.

[Amiga500]

Thanks for the advice everyone, from the responses I can see that it is not entirely straightforward.

It should just be 31 days of work and the client has said they are happy for me to bill them directly (via LTD co).

The dev does not know about the 40% of course, but I am giving him what he asked for in his quote and have neogtiated for him to work from home (pretty good gig for him I think).

I like the idea of a finders fee, but how would that work legally etc. Would I ask him for it up-front? How much would I ask for?

Thanks.

[thunderlizard]

The question is, is this a good idea? We are talking a short term project so I would stand to make 3 or 4 grand (more if it were extended).

That sounds like a good idea to me.

Would this violate contract clauses as my LTD co would be invoicing and I am on this contract with an agent?

If I go this route do I just provide a quote and then invoice the company as I would an agent?

Obviously I can only answer this by using the secret camera that I've installed in your office so I can read your contract...well it's a bit tricky to see, but if you've got a clause in there that says you can't invoice the client directly then that still applies, regardless of where you sourced the developer. You will probably have to invoice the agency, and let them invoice the client in turn.

Should I just not bother with the headache for the sum of money involved?

well, only you can quantify the degree of headache. But I'd say it's a good idea to set the precedent. Clients (and especially agencies) need to be taught the difference between a consultancy and a temp.

[VectraMan]

Does the contractor know you're taking 40%? Does the client? What happens if the client are slow on paying, is the contractor going to sue you?

I would think if YourCo is invoicing the company direct for work (even if performed by another contractor), you'd certainly fall foul of the exclusivity clause in your contract.

Best to allow the contractor to go direct to the client, and ask for a finder's fee from him I would have thought.

[TheFaQQer]

You should be fne subject to checking the contract. Dont ask the agency, they will just says yes you have to pay them without even thinking.

You *DO* need to worry about VAT since this going to complicate your VAT arrangements since you are now paying VAT to your contractor as well as it being paid to you from the client. As long as you keep the numbers straight and pay on time it needn't be a problem, but you do need to be aware of it up front.

Also, if this goes no for a long time, then there is a chance that the OP may go over the FRS threshold (which I can't remember what it is off the top of my head).

[jmo21]

and we slag off agents on here for trying to get a good mark-up!

[DaveB]

It's additional resource he's obtained not a substitute unless I've read it wrong.

I'd check my contract with the Agent quite carefully as it could be perfectly straight forwards or an utter mare, without seeing your contract I couldn't guess sorry.

You should be fne subject to checking the contract. Dont ask the agency, they will just says yes you have to pay them without even thinking.

You *DO* need to worry about VAT since this going to complicate your VAT arrangements since you are now paying VAT to your contractor as well as it being paid to you from the client. As long as you keep the numbers straight and pay on time it needn't be a problem, but you do need to be aware of it up front.

[TykeMerc]

Depends on what your contract says. Does your contract allow the right of substitution? If so, does the Agency have the right to vet the candidate?

It's additional resource he's obtained not a substitute unless I've read it wrong.

I'd check my contract with the Agent quite carefully as it could be perfectly straight forwards or an utter mare, without seeing your contract I couldn't guess sorry.

[pmeswani]

The company I am currently contracting at (through a recruitment agent) need a developer, who I have managed to source myself (he also is a contractor with a LTD co).

He has provided me with a quote for what is required and knocked 40% off of the usual price as it is project work, so I am thinking that I should invoice the client myself and then ask him to invoice me thus earning me a 40% profit.

The question is, is this a good idea? We are talking a short term project so I would stand to make 3 or 4 grand (more if it were extended).

Would this violate contract clauses as my LTD co would be invoicing and I am on this contract with an agent?

If I go this route do I just provide a quote and then invoice the company as I would an agent?

Should I just not bother with the headache for the sum of money involved?

Any advice from someone with similar experiences would be appreciated!

Depends on what your contract says. Does your contract allow the right of substitution? If so, does the Agency have the right to vet the candidate?

[Amiga500]

The company I am currently contracting at (through a recruitment agent) need a developer, who I have managed to source myself (he also is a contractor with a LTD co).

He has provided me with a quote for what is required and knocked 40% off of the usual price as it is project work, so I am thinking that I should invoice the client myself and then ask him to invoice me thus earning me a 40% profit.

The question is, is this a good idea? We are talking a short term project so I would stand to make 3 or 4 grand (more if it were extended).

Would this violate contract clauses as my LTD co would be invoicing and I am on this contract with an agent?

If I go this route do I just provide a quote and then invoice the company as I would an agent?

Should I just not bother with the headache for the sum of money involved?

Any advice from someone with similar experiences would be appreciated!