Using Vendor for limited company

[silentbull]

Hi

I am currently working with a client whom I have contract with an agency. The client had asked me for some additional resources which I agreed to supply them.

Now, those resources are not employees of my company, rather I will use another contractors with some margin for me and present it to the client. This is my scenario and have following questions.

1. First thing, is this something legal that I am not into any trouble? Can I use another contractor where he will work for my client although the contract will be between him and my company and contract between my company and the client. Am i correct in saying that he will be my vendor?

2.I am under flat rate scheme? This means I can't claim the VAT back for the invoice i am paying my vendor? The margin is so little that most of them will go back in VAT to my vendor? Is there any other way to overcome this? Although, at the same time i am saving 5.5% VAT when i receive it from my client.

3.Since my turnover or sales is going to be both my effort of time as well as my vendor effort of time, my turnover will go beyond 100k. Is this anyway create any problems in my VAT or any other effects on my company since most of them will go away as expenses paying to vendor.

Please advise as I am looking to ascertain whether this will be any way profitable to me.

Regards
Silentbull

[Pondlife]

There will most likely be a clause in your contract with the agency specifically prohibiting this.

Check it before you commit to anything.

[Taita]

There will most likely be a clause in your contract with the agency specifically prohibiting this.

Check it before you commit to anything.

Exactly right. The client wants you to undercut the agency that is supplying you..... this is the first step towards bad blood in all of the relationships. VAT thresholds are the least of your worries here!

Easiest solution is you tell the agency you have the resources the client wants and take a commission from the agency for introducing the resources.

It's good to make an additional pound or two but do you really want to upset the agency that is supplying you to the client (who is very unlikely to hire you direct)?

[silentbull]

Hi

Thanks for the replies. I am not playing any big guns over here.

My main source of income is contracting and will continue to do so. If i bring in a fellow contractor through my company, wouldn't be beneficial for me.

If the client is happy, then the agency has no stand in this isn't? Please note that these roles are not advertised by client nor by the agency, it is solely that being a director of limited company, i do have rights to supply resources right.

How would it be if the same guy is an employee of my company? Does the agency bother whether it is my employee or my vendor?

I know you guys are all just helping me in all possible ways, just wanted to get it straight.

Regards
SilentBull

[Pondlife]

I'll say it again... Read your contract. What does it say about you supplying resources direct and what are the implications if you do so?

Anything we say is speculation because we are not party to what you agreed to when you signed the contract. However I think it's extremely unlikely that this situation is not prohibited.

[pmeswani]

If you source the contractor, get them an interview and he / she lands the job, can you not then refer them to the agency for a commission fee?

[Taita]

Hi

Thanks for the replies. I am not playing any big guns over here.

My main source of income is contracting and will continue to do so. If i bring in a fellow contractor through my company, wouldn't be beneficial for me.

If the client is happy, then the agency has no stand in this isn't? Please note that these roles are not advertised by client nor by the agency, it is solely that being a director of limited company, i do have rights to supply resources right.

How would it be if the same guy is an employee of my company? Does the agency bother whether it is my employee or my vendor?

I know you guys are all just helping me in all possible ways, just wanted to get it straight.

Regards
SilentBull

As other people have said here, it is very unlikely that your agency contract allows you to freely sell contractors to their client against their interest.

Even if it is not specifically in your contract, the agency will be annoyed if you take advantage of your easy access to the client to pinch business they could have had......be aware of that.

Otherwise do what ever you like and hope that one of the contractors you place does not have equally bright 'business' ideas!

[northernladuk]

I don't want to be rude but you appear quite clueless about this whole situation as well. There is more to it than just bunging some people at them. I'd stay well away for the sake of your own contract.

[Sausage Surprise]

Have you also considered the additional paperwork and accountancy fees for supplying the extra resources.
I once helped out a mate who needed a vehicle for a 6 week contract so I agreed to put him through my ltd (acting as an Umbrella) It was a complete paperwork nightmare and one I wouldn't get into quickly again.

[thunderlizard]

Isn't the client thinking that the contracts will go [your vendors] -> [your company] -> [agency] -> [client]?. That would be the simpler and more normal way of handling this since there is already a [your company] -> [agent] contract in place.
The agent will get his x% of course, and might even have a hard time understanding the concept because they sometimes aren't very open minded, but you probably have a clause in your contract saying you can subcontract the work (usually for substitution purposes, but they often work for extra-staff-purposes too).