Client wants to give me more permanent work - help me work it out

[whoknewthat]

Right, I've named changed as I want some advice on specific figures as I don't want to mess up the negotiations.

I am a consultant and currently charge £350 a day. I have a few clients but most of them only use me 1 or 2 days per month.

I have another client who has been using about 1 day per week. He wants me to up that to 2 or 3 days week - effectively making me an integral part of the business. However they want to reduce my rate.

In it's favour,

• the hours can fit around school
• I no longer have to be continually searching for new clients (which is difficult).
• it's an office based job which is relatively local (well 40 mins drive) as opposed to generating work from home and travelling here there and everywhere.
• it's stable guaranteed work.

The downside is that I maybe turning down much more lucrative work and better opportunities to do it (or maybe not). It will limit my choices in terms of other work I can take on as I won't really be able to act as an impartial agent anymore as there will be a perceived conflict of interest.

My dilemma are these

• Should I drop my rate. They want to drop it to £200 which I can't do but what would be reasonable?

• If I accept it, I really am admitting that I'm a contractor for hire rather than building my own consultancy business. In my head, this is what I wanted to do but the reality of 2 small children means that I don't have the energy or resources to put the investment I need into growing the business so I'm just stuck in this half way house.

Apologies for whittering on - but I need to get it straight in my head (even if noone replies)

I wouldn't drop your rate and certainly by that much unless they are making you an employee so they'll do PAYE, NI, holiday and sick pay, etc.

I do do discounts for block bookings
I have one place I go regularly BUT
I reserve the right to double up some weeks and skip others (eg easter holidays)
my days vary depending on what else is going on (eg yoga or other more lucrative work !)
the deal is they pay me to do a job not sit at a desk for a certain number of hours
if I finish what needs doing I leave, but get paid my standard rate
it works

No - don't do it. You will end up in an awful hybrid place of being half consultant and half employee, and neither will work well for you. You will also never be able to develop your own business in the way that might suit you because you will be at someone else's beck and call.

And if they want you that much, why would you have to reduce your rate?

Thanks for your replies. Talkin' peace that makes sense.

I think I'm just overwhelmed a bit by the prospect of secure work - I've found the finding clients and selling myself bit quite a challenge. I'm also not in London anymore and have to get back for pickups so find the networking side of things very difficult (although I reckon it's essential)

Trying to work out my figures. When I was employed, I earned around £60k and so based my daily rate on an uplift of that, which gave me £350 a day.

But we moved out of London and this company is local to me so I feel like maybe my 'London' wage is unrealistic.

I do like the idea of them buying a bank of my time, to use as necessary, rather than a set number of days a week.

Be careful with IR35. If you commit too much time with a company you are saying you are an employee rather than an advisor. It may have tax implications, depending on how you pay your salary etc.

IR35 does not seem to stop the Chief Executive of the Child Support Agency
or the Head of Personnel for HM Revenue and Customs
let along the finance director of Westminster City Council

if OP makes sure the pay is for the job not the hours, and has a mixture of other work it should be OK

I heard a rumour that IR35 might get thrown out the window. I have no idea how true it is.

not until they have a replacement
and that could take years as John Whitings work is being hamstrung

I agree IR35 is rather flaky in its application but just mentioning it as another consideration.

I hope it is removed. It's been nothing but a millstone on many consultancy businesses.

I don't really understand how it works anyway. I am registered as Sole Trader but nowhere on my self assessment do they ask me to list my clients or the number of clients I have or anything about showing which client paid me what money, so how would they know if I only had one or if I had one that would fall under their rules?

I do have more than 1, BTW.

Are you a limited company contractor? If you start working a few days a week over a few years (cant remember how many) your permanent place of work will become the office you go to. This will mean that you wont be able to claim tax on the travel.

IME London rates are significantly higher than outside rates.

gnomedeplume, that's good to know. I think I might need to ask my accountant

This kind of arrangement can work out well IME, but not at £200pd vs £350.

Even if you assume you are only 'worth' £50k outside London, add 9% for National Insurance after allowing 5.6 weeks holiday that is £235pd. I would probably look for £300pd but be prepared to negotiate 10% or so.

You would need to have some flexibility so you can do other work, so I would look for a commitment to x days a month or similar rather than specific days per week.

If you are self-employed IR35 is not an issue, but you should definately consider incorporating, particularly if you don't want your child benefit clawed back (and can afford to leave income in the company): you should discuss this with your accountant.

If you work through a company IR35 should not be a big issue anyway - you are presumably already ticking the 'personal services company' box on the tax return but you have other clients and are clearly in business not just a pseudo-employee. You do need to be careful about the terms of the contract and your accountant may suggest this is reviewed by an IR35 specialist.

You should avoid the permanent workplace issue by making the contract an annual one: you will need to review this if you do more than 2 days a week at the client's office over a 2 year period.

Hopefully your accountant will cover these non-commercial issues with you.

It is a difficult one. I'd agree with others, try to up the money. If it turns out to be 2 days, they'll only be paying an extra £50 for another whole day of support....but talking about money is easier than doing it sometimes, or at least

that is how I find it!

I think it all depends what sort of guarantee/notice they are prepared to give, in return for you "giving up" the chance of working for others.

On the issue of "building my own consultancy business". Firstly, can you build flex into the days you do for the extended client? So if you have a few regular clients that want a little support per month you can still do this extended role and their work? It sounds like you might work 3 days, so could you go for 2 days for the extended client?

Also, you can still appear open for business to other clients, it is just a question of how you position it. I have worked for one particular client a lot recently but never updated my LinkedIn to reflect that, nor did I reveal what I was doing to other clients I just said ?I have a number of days booked with a client over the coming weeks, but I can see you x or w?. In a year or so your business could still look the same from the outside, it will just so have happened that you worked for one client more than others....

Good luck with the decision.