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Receiving funds on behalf of client

I received a call today from a potential client who is based overseas and has won a very small contract in the UK.  They will carry out IT consultancy

Their UK customer has stipulated that they will only pay into an overseas bank account if they are able to produce evidence that their consultants are paying social security contributions which seems a strange request ?  Any idea why the UK customer would make such a request ?

The other alternative is to pay into a UK Bank Account.  My potential client does not want to set up a UK company. Therefore the only options would be my UK company to invoice their customer, collect the money and pay this back to my client after deducting a small fee or for the customer to pay into my company bank account and then I would transfer the money back to my client.   Is there any implications that I need to consider from these two options ?

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24th Feb 2013 10:22

Take care

If it turns out the money is 'dodgy' you will be implicated.

This sounds like a fishing expedition, possible carousel fraud, or even just the proceeds of crime.

It may be genuine, but I wouldn't bank on it. Even if not dodgy, where would that leave you if the goods or services were faulty? You would be the one invoicing the customer!

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24th Feb 2013 10:50

Not even worth a moment's thought the answer is NO!!!!!!!!!!!! for too many reasons all bound to give you grief either short or long term

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By sash100
24th Feb 2013 11:06

The transaction is genuine as

The transaction is genuine as I know the client well and the customer is a FTSE 100 company.

What about if I just provide my company bank details ?

The problem is if I refuse to help then I stand to lose potentially good business (which I need) since the foreign company could set up a UK company in the future.

I am not sure why the customer has imposed such restictions in respect to the payment ?

 

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24th Feb 2013 11:14

Are you hungry enough to take such a risk?

Why do you think this potential customer is ringing round, and why do you think they chose you? Do you specialise in IT contractors?

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24th Feb 2013 20:35

Eh?

Apart from the reasons above for avoiding this, why would your company invoice his client? Surely he invoices his client, and asks for invoices to be paid into his UK agent's account (your client account).

 

then if there is a dispute about invoicing, you are not involved. You will of course need a solid agency agreement with your client...

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25th Feb 2013 09:01

The transaction is genuine as

The transaction is genuine as I know the client well and the customer is a FTSE 100 company 

I'm confused In your OP your refer to a potential client.

It is obvious that someone doesn't trust someone or it is a country that is embargoed for some reason.

Many years ago I had a similar situiation with a US company wanting to supply embargoed goods & services to Russia. They approached my client similarly who on my advice said NO. The Russian compnay was respectable as was the US company but jail beckoned if the deal had been done

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By Old Greying Accountant
25th Feb 2013 09:14

I wouldn't ...

... touch any client money other than tax refunds or Companies House  fees.

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25th Feb 2013 16:24

Double taxation
I wouldn't touch this with a barge poll, does seem very dodgy, but another thought if you did do it, does double taxation apply?

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25th Feb 2013 17:33

Maybe I'm old, cynical and read too much Private Eye!

My answer in cases like this is (as always) if in doubt don't.

The fact you asked the question indicates that you are unsure about this.

How well do you really know this potential client's business affairs rather than just the person?  Have they dangled the "if you do this we may appoint you as UK accountant in future" carrot?

Don't forget even FTSE 100 companies occasionally do stuff that is er... shall we say, reprehensible! 

 

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By sash100
25th Feb 2013 19:39

Evidence of Social Security contributions

Many Thanks for expressing all your views.  I have had another conversation with this potential client.   Further information has come to light

In fact, the FTSE 100 company is using a umbrella company to manage the admin. My client wanted to invoice the umbrella company direct from overseas but they insisted my client produced evidence that that he is paying foreign social security contributions .  I cannot fathom why the umbrella company is making such a request ?  There doesn't appear any rationale behind it apart from the umbrella company used to dealing with UK contractors and rarely deals with contractors from overseas.   Can anyone shed any light on why proof of social security contributions is required ?

 

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25th Feb 2013 20:00

Just tax
They probably just wnt proof that your potential client is just paying tax's - the umbrella company could always deduct the tax and fill in a CT61 (or any other form if its different) form they feel the need to.

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26th Feb 2013 10:17

Tax Head On

Putting my tax head on, where are the contractors coming from?  Is the client employing them in the UK to work in the UK or are they foreign contractors shipped over just for this contract?

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By sash100
26th Feb 2013 10:56

Why is overseas social security evidence required

Vaughan Blake wrote:

Putting my tax head on, where are the contractors coming from?  Is the client employing them in the UK to work in the UK or are they foreign contractors shipped over just for this contract?

It is just one IT contractor (who happens to be the director) of the parent company who will come to UK for a three month assignment and carry out high level consultancy.  He is from Israel but they can invoice from a number of companies in Europe. 

 

 

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By Eric T
26th Feb 2013 10:33

Rearrange the following words in the right order - 

Bargepole touch I a would not this with

 

 

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26th Feb 2013 11:11

Apart from the sound advice given

 In the innocent days of 1975 (I am that old) I did such a favour for a UK client. I ended up being sued for specific delivery. Fortunately my solicitor had the court throw out the application upon review. It still cost me two month's earninbgs in legal fees.

Barge pole is therefore the correct tool to use.

As regards social security. If this is an EU company, because of various reciprocal agreements Social Security is an issue. The same also applies to non-EU countries where there are reciprocal arrangments.

 

 

 

 

 

 

 

 

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26th Feb 2013 11:41

Does the Footsie company deal with or is owned by the Arabs. If so it could be that they don't want to be seen to be dealing with Israelis

You are getting into something that could give immense problems in the future.My suggestion AGAIN is don't touch it. Let them find some other patsy. If this is dodgy you will be utilised again and sucked into something you will not understand until the trap is shut

What is worse is it is an IT contract there could be scope for planting malware. If that did occur think of the immense damage you could be part of (albeit innocent but STUPID)

Please listen all the advice you have been given and just say NO

 

I don't normally post like this but blunt talking seems to be the only way on this occasion

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By Jacko
26th Feb 2013 12:05

Leopards & spots

I have had quite a lot of experience with various businesses from that part of the world and one over-riding constant has been their complete & flagrant disregard for procedure & compliance.

My experiences have shown me that you will not get the full picture or full disclosure of events and yet they are asking you to put your head on the block.

Please be aware of what you are getting into,and its implications.

When something looks like a fish, swims like a fish & smells like a fish:

 

It is probably a FISH !!!

 

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