Consultancy contract

[cerberaperv]

I’ve agreed to set up a contract between 2 third parties, which in effect is a long term lease.

My contract completes after everyone involved has everything legally drafted in place and then my fee is due.

I’ve never been in a consulting position before and think the best way to set this up is by me forming a ltd company, say xyz consultancy, and registering for vat, as the fee is way over the vat threshold.

Do I just instruct a commercial solicitor to draft the contract, or are there better/cheaper specialists out there?

Also would I just draft heads of terms then pass it to the company drafting the contract?

Any other tips or advice would be welcomed. Thanks

[C350Akra]

You do not need a limited company to register for VAT, a sole trader or partnership can be registered. The amount of faff involved in running a small limited company should indicate it is not necessary for a one off contract, however, best to take proper legal and accountancy advice before you decide.

[cerberaperv]

C350Akra said:

You do not need a limited company to register for VAT, a sole trader or partnership can be registered. The amount of faff involved in running a small limited company should indicate it is not necessary for a one off contract, however, best to take proper legal and accountancy advice before you decide.

Yes, thanks. I was aware of that, but this contract alone will put me in the additional rate tax bracket. I was asking more from the point how do other consultants have their contracts drafted.

[StevieBee]

Contracts are normally issued by the client not the consultant. These comprise the Terms of Reference (the brief) and the requirements set out in the number of days, remuneration and payment schedule. It's then up to the consultant to review and accept or address anything with the client they're not happy with. Once all is agreed, the Consultant signs it and that then ties everyone in to a common agreement.

Unless you're exposed to any material risk (in other words you're buying things that you sell to the client as part of your work) then there is no need to set up a company. 'Consultant' is another word for 'a job'. Just bill your time, bank the money and account for this in your self assessment. If this is something that you see yourself doing more and more of, then it might be prudent or necessary to formalise your offer through a Ltd company.

Unless the work is over a month or two, try to negotiate milestone payments rather than wait until the work ends; 10% upon mobilisation, 45% on delivery of interim report and balance upon completion - something like that.

And it sounds like your work is interdependent upon others. If so, try to decouple this from your milestone payments.

HTH