Getting paid in advance

[Contractor101101]

I haven't been able to find a thread on this.

I have just spoken to a contractor who apparently has an opportunity for me. He wants pay to go through him (yes I know he would take a cut) and I explained that I had an issue with determining his credit worthiness, etc. The usual.

He offered to pay in advance for my work on a monthly basis.

Has anyone come across this?

[LondonManc]

Never. Paid in advance sounds good - he must be getting a decent wedge if he can be that confident in you being on site for the full month.

I'm not sure how it would affect IR35 - you can't demonstrate financial risk if you're paid in advance.
What about expenses - are they significant?

[WTFH]

I haven't been able to find a thread on this.

I have just spoken to a contractor who apparently has an opportunity for me. He wants pay to go through him (yes I know he would take a cut) and I explained that I had an issue with determining his credit worthiness, etc. The usual.

He offered to pay in advance for my work on a monthly basis.

Has anyone come across this?

It's a strange one, but from your point of view, if he pays you before you do the work, then you are not exposed to any risk.

You'd want to check the details of the contract.

[Contractor101101]

Thank you both. if it goes ahead, I'll put the contract through the usual checks. I have already told him and he has not disputed it.

Yes, I have been wondering about IR35 too. I would be responsible for expenses, a fair amount of travel but only to the same spot so I have some control over that. I have asked for market rate + factoring in expenses.

I found an article on contractorcalculator.co.uk, apparently this thing happens when you are not sure of someone's credit worthiness. They recommend that you try to negotiate at least 50% of fees paid in advance.

Apparently this is quite a big deal for the main contractor because it's an offering they absolutely want to provide to the client (AWS migration related). I'm sure his cut is decent but hey if I can pass IR35 and financial risk is taken out for me then I won't argue.

[LondonManc]

I would say, never worry about someone else's cut as long as you're happy with what you're getting. This only comes to bite you when someone moans about you costing a grand a day and you only see half of that (or worse!)

If you're getting at least 70% of the charge out, then happy days - don't forget that you've done nothing to find this gig.

In terms of IR35, as long as the rest of the gig is outside, then the payment method is moot; No DSC, right of substitution if needed, etc.

[Contractor101101]

I would say, never worry about someone else's cut as long as you're happy with what you're getting. This only comes to bite you when someone moans about you costing a grand a day and you only see half of that (or worse!)

If you're getting at least 70% of the charge out, then happy days - don't forget that you've done nothing to find this gig.

In terms of IR35, as long as the rest of the gig is outside, then the payment method is moot; No DSC, right of substitution if needed, etc.

I'll propose all the terms that would pass a Qdos evaluation and will see how it goes. In theory I'd work from home about half the time too.

I won't lie, this is a bit 'too good to be true', not for the reasons I stated but because the work itself sounds interesting and potentially good quality.

will keep you guys posted since it's an unusual situation.

[Lance]

I don't think it's relevant to IR35.

The approach I'd take is that yourco get's paid for xx days up front. You then owe him xx days. You draw down those days as they are used.

This is not uncommon in real business, hence why I cannot see it as relevant to IR35.

[Contractor101101]

I don't think it's relevant to IR35.

The approach I'd take is that yourco get's paid for xx days up front. You then owe him xx days. You draw down those days as they are used.

This is not uncommon in real business, hence why I cannot see it as relevant to IR35.

Thanks Lance, I was thinking as well along the 'owe xx days'. I think it's possible that he bit off more than he can chew with the 1 month offer, I'd be happy with something like 10 working days and I'd invoice him at the end of every week or something.

The risk is still there in that I can be marched off without notice and I would owe him for days paid, so it's not like I would be treated like a permie where by law I'd have to be paid a notice.

[northernladuk]

I'm a bit late to this one so most of my thoughts have already been covered and the OP has shown he's capable enough but..

I've seen a contractor brought in by a contractor twice and both times it didn't work well at all. That said in both cases the guy coming in was pretty green and the bloke bringing in took a rather unfair chunk of the rate. I'm not so sure I agree with LM's comment about getting 70% of the rate. A more experienced guy might be used to accepting a gig and not getting upset when he finds he's only on 70% of it but newer guys certainly won't like it. Yes they accepted but we've seen before all that can change when they find out the full rate.

In both cases the paperwork was a bit slapdash as well but in this case the OP will be having it checked so fair dinkum.

I'd be paying more attention to the IR35 element as well. There is the opportunity to be D&C'd by both the contractor and his client.

That's not even getting on to this payment up front. Very odd. All very well while it's going well....

But as I say, sounds like the OP is carrying out the right diligence and is capable enough. A newbie on his first or second contract might need a whole lot of different advice.

Let's see how it goes...

P.S. Did you check out his company on something like Company Check and and see how much cash his LTD is holding?

[Contractor101101]

I'm a bit late to this one so most of my thoughts have already been covered and the OP has shown he's capable enough but..

She :-)

I've seen a contractor brought in by a contractor twice and both times it didn't work well at all. That said in both cases the guy coming in was pretty green and the bloke bringing in took a rather unfair chunk of the rate. I'm not so sure I agree with LM's comment about getting 70% of the rate. A more experienced guy might be used to accepting a gig and not getting upset when he finds he's only on 70% of it but newer guys certainly won't like it. Yes they accepted but we've seen before all that can change when they find out the full rate.

In both cases the paperwork was a bit slapdash as well but in this case the OP will be having it checked so fair dinkum.

I'd be paying more attention to the IR35 element as well. There is the opportunity to be D&C'd by both the contractor and his client.

That's not even getting on to this payment up front. Very odd. All very well while it's going well....

But as I say, sounds like the OP is carrying out the right diligence and is capable enough. A newbie on his first or second contract might need a whole lot of different advice.

Let's see how it goes...

I know who the end client is but the fact that I have never spoken to them puts me at a disadvantage.

What I do have however is a technical document he sent through, it seems like the people working on this already know what they are doing and the client appears to know what they want. This is what I mean by 'too good to be true'.

D&C concerns me yes. Not only from IR35 point of view but because I don't like it. However! Nothing ventured, nothing gained. I think I can most likely keep any kind of financial exposure reasonably under control and I am in the position to walk away if I can't.

So yes, let's see how it goes.

ps: yes and it's fine but I'll do the double check once I know whom I'm contracted with exactly. ie once it's in black and white,until then it's only an assumption