Reply to: Agencies won't take contractor if not a director

[LisaContractorUmbrella]

For this alone...



I never knew that pimps had the mental capacity to have a sense of humour.

I've met Andy several times and I can confirm that he does, without question, have several human traits

[speling bee]

For this alone...



I never knew that pimps had the mental capacity to have a sense of humour.

It's in the same cognitive category as deceit and low cunning.

[RasputinDude]

Thought I would impress NLUK by using a Google search.

For this alone...



I never knew that pimps had the mental capacity to have a sense of humour.

[Andy Hallett]

Sorry Andy but why are you using advice put out by a small recruiter rather than the vast resources of your own group?

I doubt that there are many legit accountants presently accounting for Composite Companies (if any continue to exist in the freelance industry) which is why I am puzzled by an agency still applying the director/control test. I know of a few contractor companies that are owned and directed by a party other than the one doing the contract.

Granted, they are not multi person co-ops; more a case of an established contractor with a company doing a mate a favour. By your definition would they be breaking the MSC rules?

As I have said before, it's pretty old news and I simply couldn't be arsed to dig out our own information whilst sat in front of the TV. Thought I would impress NLUK by using a Google search.

Ultimately, as it is our commercial risk I will often look further into the company structure and take a risk based decision on the likelihood of a liability transferring to us as Lisa has correctly identified.

[Taita]

Depends on how many contractors are part of that company. The 2008 legislation sought to outlaw 'Composite Companies' who were small groups of contractors all taking their money out as dividends. Effectively this forced contractors into using either their own 'Personal' company (PSC) or a brolly.

Not one of my companies but a decent summation of why an agency will require the contractor to demonstrate they control their company.

IR35 Overview and Advice

Sorry Andy but why are you using advice put out by a small recruiter rather than the vast resources of your own group?

I doubt that there are many legit accountants presently accounting for Composite Companies (if any continue to exist in the freelance industry) which is why I am puzzled by an agency still applying the director/control test. I know of a few contractor companies that are owned and directed by a party other than the one doing the contract.

Granted, they are not multi person co-ops; more a case of an established contractor with a company doing a mate a favour. By your definition would they be breaking the MSC rules?

[LisaContractorUmbrella]

Given that the 3rd party next down the chain from the MSC will be the recruitment agency, you can understand the caution over the construction and operation of Ltd Company.

This was very big news 6-7 years ago!

Ah yes the good old days

Of course recruiters have to be careful - and with the raft of new legislation that's come in even more so now. Plus it's been made doubly difficult for them as they also now risk financial penalty if they pick the wrong umbrella companies to deal with.

[Andy Hallett]

Agencies have to make sure that contractors are dealing with their taxes properly to avoid debt transfer. The Managed Service Company legislation (MSC - so yes, real) allowed for unpaid taxes to be transferred to a third party http://www.hmrc.gov.uk/employment-st...nce-july07.pdf

Given that the 3rd party next down the chain from the MSC will be the recruitment agency, you can understand the caution over the construction and operation of Ltd Company.

This was very big news 6-7 years ago!

[speling bee]

Still, this is indeed stupid - what about my employee (only one, so far), who I want to take on the job put forward by the agency?
Do I have to make her a director??? That´s ridiculous!
How about those of us, who want to grow our companies, and want to take on employees, so that EXACTLY we DONT have to do all the work personally, and can concentrate at least part-time on actually growing and managing the company?

Take on the contract as company Director and sub it to your employee.

[Goldengirl]

Still, this is indeed stupid - what about my employee (only one, so far), who I want to take on the job put forward by the agency?
Do I have to make her a director??? That´s ridiculous!
How about those of us, who want to grow our companies, and want to take on employees, so that EXACTLY we DONT have to do all the work personally, and can concentrate at least part-time on actually growing and managing the company?

[LisaContractorUmbrella]

PSC and MSC .... are this real or imagined entities? Why would they have to care about this, Andy? Bona fide ltd co supplying a worker....end of story for the agency, in my book.

Agencies have to make sure that contractors are dealing with their taxes properly to avoid debt transfer. The Managed Service Company legislation (MSC - so yes, real) allowed for unpaid taxes to be transferred to a third party http://www.hmrc.gov.uk/employment-st...nce-july07.pdf

[Wanderer]

PSC and MSC .... are this real or imagined entities? Why would they have to care about this, Andy? Bona fide ltd co supplying a worker....end of story for the agency, in my book.

How do they know it's a bonafide LTD co then? Someone contracts through a company they are not a director of and then all sorts of strange dealings go on. The company goes bust and the contractor just shrugs it off saying they weren't even a director and it's got nothing to do with them...

Any why would a contractor NOT be the director of their company? I agree with Andy on this one - if I were running an agency, I'd be inclined to not deal with a freelancer unless they were the director of the company they work working through...

[Andy Hallett]

PSC and MSC .... are this real or imagined entities? Why would they have to care about this, Andy? Bona fide ltd co supplying a worker....end of story for the agency, in my book.

Depends on how many contractors are part of that company. The 2008 legislation sought to outlaw 'Composite Companies' who were small groups of contractors all taking their money out as dividends. Effectively this forced contractors into using either their own 'Personal' company (PSC) or a brolly.

Not one of my companies but a decent summation of why an agency will require the contractor to demonstrate they control their company.

http://www.inspiredrecruitment.com/r_msc.php

[Taita]

I am presuming that the agency is using it for a test to see whether you are a genuine PSC or may be disguising yourself with others in an older style MSC.

PSC and MSC .... are this real or imagined entities? Why would they have to care about this, Andy? Bona fide ltd co supplying a worker....end of story for the agency, in my book.

[Andy Hallett]

I am presuming that the agency is using it for a test to see whether you are a genuine PSC or may be disguising yourself with others in an older style MSC.

[TheFaQQer]

If you aren't a director, ask them if they know of any other agencies that are trying to fill that role who might understand that this is a stupid requirement.

It's kind of like that Rory bloke who was arguing this year that his agency wouldn't work with a contractor who wanted to opt into the agency regulations if they were the sole director of the company