UK Contractor working with a US agency on a UK based assignment - advice needed

[Vishy]

I am a newbie contractor running a UK limited company. I have been offered a UK-based role with an impressive and well established American company in the City London (so far so good), but the agency is a US-based company in Ohio.

The agency contract they sent over says a few things that unnerves me. It has quite a lot of American terminology and, quite frankly, I worry that if I fell into a dispute with the agency that I would not have the first idea how to pursue them legally. The contract states "The laws of the state of Ohio shall govern the validity of this agreement". They also haven't sent me a formal works schedule that is as thorough as one I would expect from a UK agency.

The US agency seems pretty reputable, but I don't know anything about US workers rights. Would I still be protected by laws protecting UK contractors if I sign this agreement? What pitfalls should I look out for? Your help and advice please. Thank you!

[SueEllen]

If there is a dispute you would have to go to the Ohio courts to sort it out.

If you can afford to do that take the contract. If not pass.

[jamesbrown]

You'd be better off all around by trying to work this via a UK agency. I have a few US clients (working direct), and there are some hurdles to jump through w/r to insurance (you need specialist PI insurance that covers US jurisdiction and governing law) and US contracts are generally pretty verbose, so you need to have them reviewed carefully for T&C.

FWIW, there is a difference, in principle, between the jurisdiction and governing law associated with a contract. The jurisdiction determines where a dispute is heard. The governing law determines the legal system applied. In all likelihood, Ohio is specified for both, but this is relevant for insurance purposes. There are no material reasons why you cannot work with US clients, but given that your work will be UK based (which means that you will likely be required to charge VAT based on the place of supply rules), you may have some headaches with this particular situation.

Also, you need to separate between your obligations under this contract and your relationship with YourCo. You are still the director of (and an employee of) YourCo here in the UK.

[BlasterBates]

The key problem with this contract is sorting out any dispute. Basically you won't be able to. You would need to add in a risk of a month's unpaid invoice. Perhaps you could get them to pay weekly.

[Vishy]

Thanks for your help and advice so far peeps. I am taking your opinions and advice on board and following up with the US agency to try and get amendments to the contract.

One interesting point raised was the charging of VAT, which I hadn't even thought of.

So I will be invoicing the US firm who provide the contractor (me) to the US company with an office in the UK. As I will be working onsite in the UK, would it be deemed that the service is delivered in the UK? Can a US company reclaim UK VAT charged to them?

[jamesbrown]

Thanks for your help and advice so far peeps. I am taking your opinions and advice on board and following up with the US agency to try and get amendments to the contract.

One interesting point raised was the charging of VAT, which I hadn't even thought of.

So I will be invoicing the US firm who provide the contractor (me) to the US company with an office in the UK. As I will be working onsite in the UK, would it be deemed that the service is delivered in the UK? Can a US company reclaim UK VAT charged to them?

You can call the VAT helpline, as they are typically very helpful. See here also (notably line 5 in the table).

[TheFaQQer]

So I will be invoicing the US firm who provide the contractor (me) to the US company with an office in the UK. As I will be working onsite in the UK, would it be deemed that the service is delivered in the UK? Can a US company reclaim UK VAT charged to them?

This was discussed in this thread earlier this year:

As it is services being provided, the place of supply will be the country that the customer is based, irrespective of the physical location that the work is carried out. Therefore if you will be sending your invoice to somewhere outside the UK then you will not need to charge VAT.

As the supply will be outside the scope of UK VAT you will not charge VAT on the invoice, and you will not pay it over to HMRC either.

HTH

[TheCyclingProgrammer]

This was discussed in this thread earlier this year:



HTH

If you read towards the end of the thread you'll see that it's very possible that UK VAT is still chargeable if the US client has a UK establishment and the work is performed at that establishment, regardless of the contractual position.

So probably best to speak to the VAT helpline on this one.

[TheFaQQer]

If you read towards the end of the thread you'll see that it's very possible that UK VAT is still chargeable if the US client has a UK establishment and the work is performed at that establishment, regardless of the contractual position.

So probably best to speak to the VAT helpline on this one.

I'd missed the part in the original post about being in the City. If that's the case, then I think VAT would be charged.

[jamesbrown]

See the link I posted above. The place of supply rules can be complicated (with various special rules), but the OP indicates that the services will be enjoyed in the UK, in which case the place of supply will most likely be the UK. Staff on the VAT helpline are well-informed in my experience.