Using consultancy Ltd as a recruitment agency

[yasockie]

Hi.

I know that the topic has been raised quite a few times, so I wanted to confirm what's current with the latest AWR etc.

The gist of my Ltd is IT consultancy, but I wanted to hedge bets and expand into recruitment (not necessarily IT).
I would expect that initially that would form ca 10% of the Ltd's income.

Is it possible to use the same Ltd for those two activities, initially?
I expect that if the recruitment were to pick up I would spin-off a separate Ltd, but initially, I want keep things simple, if possible, but I guess it might not be so easy, due to different Flat Rate VAT for those activities etc?

[ASB]

Hi.

I know that the topic has been raised quite a few times, so I wanted to confirm what's current with the latest AWR etc.

The gist of my Ltd is IT consultancy, but I wanted to hedge bets and expand into recruitment (not necessarily IT).
I would expect that initially that would form ca 10% of the Ltd's income.

Is it possible to use the same Ltd for those two activities, initially?
I expect that if the recruitment were to pick up I would spin-off a separate Ltd, but initially, I want keep things simple, if possible, but I guess it might not be so easy, due to different Flat Rate VAT for those activities etc?

You can do it assuming your articles allow it (which they probably do). Yes, flat rate VAT is potentially an issue. You only get one flat rate, it will likely remain whichever you are currently on.

Of course you could come off the flat rate scheme, only you can work out which is likely to be most beneficial. You also need to check what your annual turnover is likely to be, that might preclude use of the flat rate scheme anyway.

[d000hg]

What's the legal difference between being a recruiter, and simply charging out developers/consultants to your clients?

[Wanderer]

What's the legal difference between being a recruiter, and simply charging out developers/consultants to your clients?

The terms "employment agency" and "employment business" are defined in law somewhere, I can't remember exactly where. I'm sure that someone here will know. I am not a lawyer but my understanding of the law is thus:


If your business is introducing people to employers then it may be acting as an employment agency.

If your business is supplying workers to a an employer or client then it may be acting as an employment business,

If your business is subcontracting work to people who will work autonomously for your business with little or no interaction with the client or under the direction and control of your business rather than the end client's business then you are probably NOT acting as an employment business.

I'd be inclined to get legal advice on that though because if you become an employment agency/business then there are a bunch of regulations to deal with so it's most likely that you want to avoid this.

[TheFaQQer]

The terms "employment agency" and "employment business" are defined in law somewhere, I can't remember exactly where. I'm sure that someone here will know.

Employment Agencies Act 1973 section 13 subsection 2 and 3:

For the purposes of this Act " employment agency " means the business (whether or not carried on with a view to profit and whether or not carried on in conjunction with any other business) of providing services (whether by the provision of information or otherwise) for the purpose of finding workers employment with employers or of supplying employers with workers for employment by them.

For the purposes of this Act " employment business " means the business (whether or not carried on with a view to profit and whether or not carried on in conjunction with any other business) of supplying persons in the employment of the person carrying on the business, to act for, and under the control of, other persons in any capacity.

It's certainly worth reading up on The Conduct of Employment Agencies and Employment Businesses Regulations 2003 and AWR

[Wanderer]

Employment Agencies Act 1973 section 13 subsection 2 and 3:

Yeah! That's it.

I think the broad advice is that if the subbies work for your company then you are OK but if they work for the client then you are an agency. Judging by the number of laws out there it would be useful to get some professional opinion on how to avoid becoming a pimp.

[Greg@CapitalCity]

And just keep in mind the flat rate VAT issue.

If the recruitment income is around 10% of your total turnover, the selection of the flat rate scheme will not be an issue - stick to the one you have. If recruitment company income starts to dominate turnover, it will be time to start think about a flat rate trade sector change.

However, if you take on sub-contractors who are VAT registered themselves, you may find yourself better off reverting to the standard rate scheme (you will not be able recover any of the VAT you pay out to your sub-contractors if you are on the flat rate scheme). A couple of things to think about anyway.