Rates and PAYE

[Jkettle]

Rates and PAYE

I have just been offered a new contract but I am expected to pay myself PAYE with means my Retention figure is going look something like 55% to 60%, which is pretty rubbish.

Apparently this is becoming the norm and the fact I have to pay both employees and employers NI is factored into the rate. Plus I have to public liability insure, plus I don’t get any holiday or sick pay plus I don’t get job security plus I have pay fees to the umbrella company and to my account. Is it just me or is this very one-sided?

Also I read that market rates are going up but is anybody factoring the fact companies are paying more because they are stipulating you pay yourself PAYE.

And why have I read nothing about this???

Confessed.

JK

[Rebecca Loos]

I think it's a new thing and it's only some agencies that are doing it, not all of them.

It is a horrendous trend in my opinion. I wouldn't like to work through an agency that dictates how I pay myself.

Have you checked that they're enforcing this only with contractors who are contracting thru an umbrella company, but leave well alone contractors operating thru a LTD?

[malvolio]

It's ben noted and commented on in various places. However, on what basis is the agency or the client telling you how to run your business? It is none of their concern. If you can afford it, walk away and tell the client (not the agency) that you refuse to be treated as an employee (which you are emphatically not) unless you get the same employment rights, in which case you want a permanenet job.

Or let me guess - the agency is one of the big ones with a fairly short name and the client is a bank with Swiss coneections? In which case the bank is running an "imaginative" solution to save itself VAT by declaring you to be the employee of the agent, thereby passing its taxation liabilities on to its suppliers. That is also being protested.

[Jkettle]

Yes I've checked.

Any contractor not matter how they are set-up needs to pay themselves PAYE with 100% of the funds received.

To make it worse, I know that they have other contractors in their on normal contracts. The rule only applies to new contractors. Contract renewals are allowed to continue as they.

This most be unlawful in some way! I think the PCG should be doing something to sort this out.

JK

[threaded]

Well, I'm negotiating a contract at the moment and one of the clauses told me, essentially, minimum number of staff to have on the project, which is OK in so far as it goes, but then it goes on to say how to stagger their holidays and what rules to use to let staff have time off at short notice.

[malvolio]

I hear the PCG is on the case - so let's not hold our breath just yet...

Basically, what's happening is that the bank, who cannot be VAT registered, has discovered a loophole - if the agency pays the contractor's inclusive of PAYE and NICs, then the bank only needs to pay VAT on the agent's commission, not on the whole cost of supply, which they see as a significant saving, since they can't recover VAT paid. It only works, legally, if the contractors money is paid as gross salary.

The minor details that this is effectively dictating another company's fiscal policy against company law, that is passing the bank's legitimately-incurred taxation liability to a third party and that it is effectively making people employees without any employment rights (18th century millworkers, anyone?) seems not to matter too much. I rather hope these are the points the PCG is addressing.

The real world answer is not to sign up to such a contract. Sadly, there are too many muppets out there who will do just that and ignore the wider implications for themselves and the contractor market in general. And of course, not everyone can afford to refuse income.

[Rebecca Loos]

Malvolio, you are indoubtedly right. But I think there are also other instances of agencies trying to dictate how contractors "employed" by a brolly pay themselves.

I was phoned a few weeks ago by a progressive agency ( ) that was offering a decent rate for a Portsmouth-based contract (£65 an hour) but insisted I use one of their preferred brollies and pay myself PAYE and not dividends. However I was under the impression that if I was running my own LTD company, then they obviously wouldn't have had any control on how I am paying myself (it would have been completely out of sight to them) and therefore I would have been free to do what I like.

I don't think it was anything to do with that Swiss bank that you mention, but I may be wrong (some banks have dev going on in the Portsmouth / Bournemouth area after all)

[Mindomoo]

It is not just the bank............

1. Some agencies are now stsrting to say you must use their brolly which will only pay you PAYE.

2. Others are insisting on the same as the bank.

they are selling themselves to the client as being able to "guarantee that hector wont come sniffing".

I wont touch (1) with a bargepole. If they say limited, prove it and I'd like to see a court hold up that contract term.

[malvolio]

OK, but outside the banking world, the story being sold byt the agencies is that having your contractors under full IR35-like rules will probably protect the client from both claims for employment rights and time-wasting inquireis from Hector - which it won't - after all, if you force someone into an employee-like position with no rights, sure as hell they're going to start demanding them.

What nobody is pointing out is that a proper B2B contract between client and contractor , even with an agency in the middle, would absolutely guarantee that won't happen.

Frustrating isn't it - the answer is known but nobody is selling it.

[BoredBloke]

A simple test would (or could) be, are you happy with the amount after the PAYE deductions? If the answer is no, then tell the agency to shove the role and to find a mug who is prepared to work 2 days per week for Gordon Brown.