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Prime contractor fee (subcontractor found the job but wants to use my SW license)

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    Prime contractor fee (subcontractor found the job but wants to use my SW license)

    Greetings!

    Apologies in advance: English is not my first language.

    I am in a peculiar situation where an independent consultant has asked me to act as a prime contractor for him. I have an LTD and he just wants to start solo work after decades of being either an employee or a consultant doing implementations for a big name company. He has personal connections which can land him a job with a large client. However there is a certain requirement on the client side. If they want to get all corporate approvals for hiring an external company or individual to do something they need that external company to be a certified implementation service provider of the software company which provides them with the system on which the work will be carried out.

    Here I come into the picture - I already have such status and I am paying an annual fee for the software license and I spent a few months getting the status sorted.

    So in the end the situation would look like this: my company would be hired by the client and I would then hire the subcontractor to actually carry out the work. Consultant/subcontractor-to-be indicated already that he is happy with me taking some commission. He knows people at the software provider but doesn't seem to be interested in attempting to get the ISP status (it is a bit of a headache and there is the annual fee). I also contacted them and got a green light for this.

    My questions to everyone here who hopefully understood what I wrote down and who have more insight/experience:

    1) Is there anything that I'm not seeing here? Could I get myself into more trouble than I now see?

    2) I know it's my commercial decision at the end of the day, but what would be your ideas on fair commission that could work well for both parties? The situation would be clearer if I was just doing simple admin or if I actually found the work for him.

    If this works out well we might turn it into a mode of operation for the two of us and I'm happy to build a profile for him on my website and similar.

    Many thanks to everyone!

    #2
    Yes, you could find yourself with problems, I remember a similar situation where a contractor was being used just for his certification/software licence- it was not to the contractor’s benefit.

    I’ll see if I can find the thread, but in the meantime someone with more knowledge than I might post here.
    "I can put any old tat in my sig, put quotes around it and attribute to someone of whom I've heard, to make it sound true."
    - Voltaire/Benjamin Franklin/Anne Frank...

    Comment


      #3
      Originally posted by cojak View Post
      Yes, you could find yourself with problems, I remember a similar situation where a contractor was being used just for his certification/software licence- it was not to the contractor’s benefit.

      I’ll see if I can find the thread, but in the meantime someone with more knowledge than I might post here.
      Thanks cojak! I'll try and find it too - I didn't see it when I ran the search originally.

      I sense there might be things there working against me. I double checked my contract with the software provider and this seems kosher and I've also informed them about the whole thing and I'm waiting for their position on this. They are usually rational and don't stand in way of implementations. Two things they are keen on are non-compete in terms of SW, and using licenses to do work which isn't implementation or consulting. It is industrial software and if I would lend my license to a producing company I would be in big problems, if I'm implementing it or doing a live test it is OK.


      What I'm afraid of is how doubling up my revenues might affect me negatively in terms of insurance costs or tax benefits.

      Comment


        #4
        Prime contractor fee (subcontractor found the job but wants to use my SW license)

        Originally posted by DerekDuvall View Post


        What I'm afraid of is how doubling up my revenues might affect me negatively in terms of insurance costs or tax benefits.
        Doubling revenue will have no affect on tax, other than VAT.
        Your company is taxed on profit.

        Insurance might go up, but you need to check your policy to see.

        Not being funny or owt, but why are you afraid of business success?
        See You Next Tuesday

        Comment


          #5
          Parapraxis

          Originally posted by Lance View Post
          Doubling revenue will have no affect on tax, other than VAT.
          Your company is taxed on profit.

          Insurance might go up, but you need to check your policy to see.

          Not being funny or owt, but why are you afraid of business success?
          Thanks Lance! I had the same initial thought that other than VAT (which I wouldn't charge anyway for B2B services) there wouldn't be a tax issue. Any other cost increase, insurance or accounting fees, I can simply calculate into the fee. I just like to ask on forums as my optimism can occasionally be costly - I wouldn't like to oversee anything.

          Your last question - probably very valid in a Freudian sense

          Comment


            #6
            Why wouldn’t you charge VAT to a business?
            It’s not an optional thing. You still charge it, but they, if registered, can claim it back.
            See You Next Tuesday

            Comment


              #7
              Originally posted by Lance View Post
              Why wouldn’t you charge VAT to a business?
              It’s not an optional thing. You still charge it, but they, if registered, can claim it back.
              You're right. I was out of VAT scope until now so I wasn't thinking about many things. Still, shouldn't pose a problem as the customers are mostly foreign businesses.

              I think I'll go ahead with the deal, I just need to figure out how much to charge...

              Comment


                #8
                Originally posted by DerekDuvall View Post
                You're right. I was out of VAT scope until now so I wasn't thinking about many things. Still, shouldn't pose a problem as the customers are mostly foreign businesses.

                I think I'll go ahead with the deal, I just need to figure out how much to charge...
                you need to be really careful with VAT for foreign customers. I don't know much about it but I know enough that I would double check for each country.
                Until Jan 1st the UK/EU VAT rules were clear. But now they are not. So good luck with that if you have EU clients.
                It could be costly if you get this wrong.
                See You Next Tuesday

                Comment


                  #9
                  Originally posted by Lance View Post
                  you need to be really careful with VAT for foreign customers. I don't know much about it but I know enough that I would double check for each country.
                  Until Jan 1st the UK/EU VAT rules were clear. But now they are not. So good luck with that if you have EU clients.
                  It could be costly if you get this wrong.
                  Yep - the accountant bill alone for multi-jurisdiction VAT filing means this isn't going to be a take £10 a day from my mate for letting him use my tools agreement

                  Comment

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