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consultants contracting...possible?

 
#1 consultants contracting...possible?
09/08/2012 15:08

cidr

Hi Folks,

Rather strange question. I work for a business intelligence consultancy. At the moment work is scarce and they would like to contract me out.

This would be the same process as calling up agencies and looking for contracts with other companies.

There seems to be uncertainty with the recruitment agencies. Some think if you do it through a company, then it has to be your company, you have to be director of the limited company.

Some recruitment agencies use an 'Umbrella' company to sort out the billing side. This would mean that this company would sort out the billing side with the Consultancy I work for.

I don't know the laws/restrictions around this. Has anyone been with (or heard of) a Consultancy who has done this? If this viable?

Any advice is most welcome

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#2 RE: consultants contracting...possible?
21/08/2012 11:21

Mr Cool to cidr (#1)

No legal obstacle but no recruitment agency will want to touch this. Consultancies are in many ways their competition, so introducing one to a client, even on this basis would be uncomfortable.

Also unlikely that they would want to pay you rates.

Besides - no shortage of experienced contractors.

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#3 RE: consultants contracting...possible?
29/01/2013 11:52

kokoi2204 to cidr (#1)

When you land an assignment as a contractor through a recruitment agency, you'll frequently be offered two separate pay rates for the job: one rate to work as an agency PAYE employee, and another rate to work through an umbrella company or your own limited company (LTD).

When deciding whether to use an umbrella company or work through your own limited company, it's worth the effort to consider the impact of IR35. If you fall within IR35, it is usually more cost-effective to work with an umbrella company, and depending on the fees charged by the umbrella, you may even prefer being an agency PAYE employee. Most new to the market contractors are not yet familiar with the responsibilities or processes involved in running their own limited company which effectively removes this option, at least for the first assignment. So it boils down to a choice of two - agency PAYE or umbrella company.

Working PAYE at the agency is certainly the most convenient, but you may want to consider whether an umbrella company will offer a higher take home salary. The added pay can be significant, particularly over the long term, and you have the option to switch umbrella companies at any time... or even move to using your own limited company once you're more familiar with the contracting game.

Being an employee of the agency is not a particularly popular option, for contractors or recruiters. Agency PAYE positions don't normally offer you the ability to offset business expenses against your taxable pay. Umbrella companies do, provided of course you have in fact incurred the expenses being claimed and can prove them with original receipts.

In the end, the most important factor to consider when weighing up the two pay rates proposed by your agency is whether or not the second (or inflated) rate adequately covers the employer's national insurance contributions, holiday / sick pay and payroll administration cost that a recruiter will save by NOT employing you on their books. To put that another way, will you better or worse off once YOU have effectively paid these things by working through an umbrella company or LTD?

I personally use an umbrella company, fast payment and can negotiate with them the take home pay... but of course this will vary from one company to another

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#4 RE: consultants contracting...possible?
29/01/2013 11:52

kokoi2204 to cidr (#1)

When you land an assignment as a contractor through a recruitment agency, you'll frequently be offered two separate pay rates for the job: one rate to work as an agency PAYE employee, and another rate to work through an umbrella company or your own limited company (LTD).

When deciding whether to use an umbrella company or work through your own limited company, it's worth the effort to consider the impact of IR35. If you fall within IR35, it is usually more cost-effective to work with an umbrella company, and depending on the fees charged by the umbrella, you may even prefer being an agency PAYE employee. Most new to the market contractors are not yet familiar with the responsibilities or processes involved in running their own limited company which effectively removes this option, at least for the first assignment. So it boils down to a choice of two - agency PAYE or umbrella company.

Working PAYE at the agency is certainly the most convenient, but you may want to consider whether an umbrella company will offer a higher take home salary. The added pay can be significant, particularly over the long term, and you have the option to switch umbrella companies at any time... or even move to using your own limited company once you're more familiar with the contracting game.

Being an employee of the agency is not a particularly popular option, for contractors or recruiters. Agency PAYE positions don't normally offer you the ability to offset business expenses against your taxable pay. Umbrella companies do, provided of course you have in fact incurred the expenses being claimed and can prove them with original receipts.

In the end, the most important factor to consider when weighing up the two pay rates proposed by your agency is whether or not the second (or inflated) rate adequately covers the employer's national insurance contributions, holiday / sick pay and payroll administration cost that a recruiter will save by NOT employing you on their books. To put that another way, will you better or worse off once YOU have effectively paid these things by working through an umbrella company or LTD?

I personally use an umbrella company, fast payment and can negotiate with them the take home pay... but of course this will vary from one company to another

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#5 RE: consultants contracting...possible?
29/01/2013 12:13

marsday to cidr (#1)

an agency could just do this for margin only, thereby having no payroll no indemnity issues and no contract with you directly.

Unlikely an agency would touch this arrangement though - and neither should you. Why would you want to give up a much higher day rate to be paid a fraction in salary for the exact same project?

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