Agency demands to go umbrella or VAT registered ltd, I don't want neither

[mrv]

Got a role and started working without being "Set up with the agency", meaning I had only oral confirmation of the t&c, got a congratulationary email with a few more details later. I guess this is a thing now, seems like those days of "print this contract, sign every page and send the scan back a week before your 1st day of assignment" are gone. A couple of weeks into the contract the fun began - the agency refused to set me up on their timesheet system and pay me because I'm not VAT payer. I'm registered as an individual professional in my home country (EU), I'm not VAT payer, been doing business accross EU, including UK and including the same agency a few years ago without any problems. Agency says their policy has changed and now they only work with VAT registered entities, so I should either register for VAT (major pain in the lower body area) or use an umbrella company (significant hit to my bottom line). Now the contract is almost over and we are still debating the financials. My question is can the agency refuse to work with me if I'm not registered for VAT? Is there some legal reason for this or is it only their own rules?

[northernladuk]

Looks like this might help...

Sole traders and recruitment agencies

Mentions it here but not much detail.

http://oneclickgroupuk.com/news/umbr...imited-company

[gables]

I can see why the agency would want you as either Ltd or Umbrella as per NLUK post, don't see why they should insist you be VAT registered if you're below the threshold.

[doconline]

Only reason I could think is it is a high value contract which would put OP over VAT threshold before the perceived end of the contract, so want them to be VAT registered from the start to save them hassle in the future?

[mrv]

Ok, I see they might be adverse to working with sole traders. Google suggests I might qualify as sole trader myself, although I think since I'm not a tax resident in the UK there should be no difference to them what I am and how I'm registered.

[TheCyclingProgrammer]

Broadly speaking, they are entitled to set the conditions under which they will offer a contract. If they are only willing to deal with VAT-registered Ltd companies then that is their policy.

[SueEllen]

Ok, I see they might be adverse to working with sole traders. Google suggests I might qualify as sole trader myself, although I think since I'm not a tax resident in the UK there should be no difference to them what I am and how I'm registered.

Tax regulations don't work like that.