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Is my recruiter negligent?

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    Is my recruiter negligent?

    I'm a freelancer with my own ltd company and I've never taken a contract inside IR35 before. Most of my work is ad-hoc. I was contracted by a recruiter about a six month, 4 day a week contract inside IR35. I told them I am ltd and work for multiple clients. (True freelance basically). My accountant said it may still be possible to work ltd but they might make me do an umbrella. The recruiter mentioned nothing up front when I said I was ltd and we agreed a day rate. I received no additional information until I started the contract when they told me I needed an umbrella. They sent a bunch of calculations deducting employers' national insurance from the gross rate that was agreed. I've contacted them to say this means the new rate isn't what was agreed and now they seem to be ghosting me... does anyone have any advice for this situation? I feel as thought they falsely advertised the role and did not share the full details about the terms and conditions. (They still haven't sent me anything in writing confirming all of this, aside from suggested umbrella illustrations which take my rate of pay down by £75 a day, before personal tax.)

    #2
    Originally posted by Frances1990 View Post
    I was contracted by a recruiter about a six month, 4 day a week contract inside IR35.
    If the recruiter told you upfront that the contract was inside IR35 then I don't think they were being negligent. Your accountant was probably thinking of "deemed payments" through your limited company, but it works out much the same as using an umbrella, i.e. you still have to take the money as salary rather than dividends.

    Unfortunately, the only real advice I can offer is "take it or leave it". I.e. if you're not willing to accept this daily rate for an inside IR35 contract then you can hand in your notice, but I don't think you're going to get a higher rate out of it. The only way you can avoid paying tax is to do salary sacrifice, i.e. divert most of your day rate into a pension, but that will depend on whether you can afford to take minimum wage for the duration of this contract.

    On a side note, having multiple clients is irrelevant for IR35: there's a separate assessment for each role.

    Comment


      #3
      Originally posted by Frances1990 View Post
      I'm a freelancer with my own ltd company and I've never taken a contract inside IR35 before. Most of my work is ad-hoc. I was contracted by a recruiter about a six month, 4 day a week contract inside IR35. I told them I am ltd and work for multiple clients. (True freelance basically).
      So your first issue lands here. Inside IR35 means some or all of the elements that make a gig B2B are not there. Usually they want people under Direction and control, won't accept subs. Many inside gigs are just temp bum on seats roles. You will probably have times to work in the contract. If it says 9 to 5 or 8 hours a day then bang goes your freelancing. You can't be doing other clients work on a contract with such timings. The point is arguable at the moment as you are out of the clients eye and can get away with anything. In reality, if you can't tell your new client you are doing work during the day when you should be doing 8 hours then you shouldn't be doing it. Inside IR35 contracts are not freelance. They are pseudo permie.

      My accountant said it may still be possible to work ltd but they might make me do an umbrella. The recruiter mentioned nothing up front when I said I was ltd and we agreed a day rate.
      Your accountant was right and at this point you should have gone to the recruiter to ask. The general assumption is that you will be via brolly, some agents will offer a PAYE option and virtually no one will do deemed payments to the LTD. You haven't understood IR35 contracts properly so have also misunderstood how you get paid. You can't really blame the recruiter. They know what they are doing and are working on a ton of assumptions that you do to. This is where it went wrong. You should have asked about payment and engagement at which point they would have said 'oh yeah, brolly as usual'

      I received no additional information until I started the contract when they told me I needed an umbrella.
      Yup. That's exactly what everyone that knows inside IR35 gigs would expect. What is rather strange here is that the contract needs to be signed by the brolly. The chain goes client --> Agent--> Brolly --> You. So the brolly hold the contract with the agent and you hold an employment contract with the brolly. With no brolly you could not have signed the contract. Did you start without signing anything? Seems odd they've let it get that far without a brolly on board to sign.

      They sent a bunch of calculations deducting employers' national insurance from the gross rate that was agreed. I've contacted them to say this means the new rate isn't what was agreed and now they seem to be ghosting me... does anyone have any advice for this situation? I feel as thought they falsely advertised the role and did not share the full details about the terms and conditions. (They still haven't sent me anything in writing confirming all of this, aside from suggested umbrella illustrations which take my rate of pay down by £75 a day, before personal tax.)
      Again, this is fundamentally how inside gigs work. The second you see inside you got to a calculator on all the umbrella pages and many other places and put the rate in which gives you a fairly rough estimate of your take home. The rate advertised for an inside gig is gross, just like an outside one really. Just completely different taxation. Inside is permie tax.

      From what I see everything that has gone wrong is from your side not understanding, researching or asking about an inside IR35 contract. It's absolute contracting 101 an inside gigs gets taxed like a permie and you have to go through a brolly. It really is as simple as that. In it's absolute simplest terms - Inside > Brolly, Outside > LTD. Nothing else to it. Something you've clearly missed throughout the process.

      That said we still haven't got to the bottom of how you've started a gig without a brolly in place. The recruiter could be playing a bit lose and fast and got you on site expecting to deal with the paperwork once you've started. Delaying would have hit their commission. You'll have to explain that bit to us better.

      You've applied for something which isn't what you do I am afraid and you've been caught out by not understanding this.

      The full terms and conditions are not advertised, they are agreed and discussed by two parties that are aware of what is happening once you've engaged and you've been caught out. Absolutely nothing to see here I think. You take it or you don't but bear in mind my point right at the beginning, if the contract, which it will, says 4 days a week 9 to 5, or 24 hours a week or variations of that then that's what you will work. That's not going to fit in well with true multi client freelancing.
      Last edited by northernladuk; 12 October 2021, 00:57.
      'CUK forum personality of 2011 - Winner - Yes really!!!!

      Comment


        #4
        I asked the recruiter about payment in the first instance and told them I was limited. They said this was fine (verbally). I went ltd two years ago not to save tax, but because corporate companies wouldn't employ me without one. (I could not be paid as a self employed person with certain clients.)

        I started with the company because they had an urgent start date and agreed to the day rate in writing, with no mention of umbrellas or a breakdown of costs. After I started they told me they needed my umbrella company details to finalise the contract before I could be paid. Presumably I should have been sent breakdowns etc before starting.

        Comment


          #5
          Then I’m afraid that you will have to either find an umbrella fast (Clarity is recommended here) or terminate the contract.

          I would advise that you make that decision today as any delay will make a poor situation worse.
          "I can put any old tat in my sig, put quotes around it and attribute to someone of whom I've heard, to make it sound true."
          - Voltaire/Benjamin Franklin/Anne Frank...

          Comment


            #6
            Originally posted by Frances1990 View Post
            I asked the recruiter about payment in the first instance and told them I was limited. They said this was fine (verbally). I went ltd two years ago not to save tax, but because corporate companies wouldn't employ me without one. (I could not be paid as a self employed person with certain clients.)

            I started with the company because they had an urgent start date and agreed to the day rate in writing, with no mention of umbrellas or a breakdown of costs. After I started they told me they needed my umbrella company details to finalise the contract before I could be paid. Presumably I should have been sent breakdowns etc before starting.
            Not personally - legally you should have been. However, you could only really claim the difference for the time prior to the KID (Key Information Document) arriving so it wouldn't make much difference (and even then we haven't seen a test case reach a tribunal yet).

            2 things I would add:-

            Using an umbrella isn't bad if you can afford to put money into a pension - everything above £10 (an hour) except for the umbrella's fee can go into your pension via salary sacrifice.

            If you are leaving because of the pay do so quickly...
            merely at clientco for the entertainment

            Comment


              #7
              TL;DR

              You started a gig without a signed contract
              Originally posted by Stevie Wonder Boy
              I can't see any way to do it can you please advise?

              I want my account deleted and all of my information removed, I want to invoke my right to be forgotten.

              Comment


                #8
                They never sent me a key information document and still haven't. Unless the key information document is a breakdown of costs? They sent this after I started (and for the wrong contracted number of days). It's interesting to hear about the pension, but presumably you still have to pay the same employers' NI? I don't mind paying more personal tax tbh, it's the employers' tax I object to because of course there's no benefits. (I know the rate is meant to be uplifted, in this case it hasn't been based on the standard pay for these roles.) Thanks for the advice though, very useful.

                Comment


                  #9
                  Originally posted by Frances1990 View Post
                  It's interesting to hear about the pension, but presumably you still have to pay the same employers' NI? I don't mind paying more personal tax tbh, it's the employers' tax I object to because of course there's no benefits.
                  Nope, if your pension is paid via salary sacrifice a good umbrella will pay everything (including employer NI) into your pension scheme.

                  As for the rest - again the issue is with your agency (and Advertising Standards). Why a contract is subject to PAYE the rate advertised should be PAYE but there is nothing legislated to insist agencies do that so agencies pull tricks to make the job look way better than it actually is.
                  merely at clientco for the entertainment

                  Comment


                    #10
                    Seems odd that if they stated it was inside IR35, you told them you were operating via your Ltd company, then they should have been taking the deductions at source before paying the Ltd company, seems like a lack of communication from them! If the original assingment was stated as inside, and somewhere it stated that the role was to be undertaken via a brolly, then there is no recourse, if they didn't supply the KID, or didn't state that it was via a brolly, then you would have a case to go back and ask them to cover the employment costs. Basically all down to what was originally sold to you in the details.

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