Is it dodgy?

PGM
PGM Font Of All KnowledgeRegistered Posts: 1,954
I'm not sure if this is wrong, I can't think what rules it directly breaks?

A client has been asked to run a project, for say £30k, but only £25k is for the project he is running, and £5k is to be paid direct to a subcontractor.

The client isn't gaining from the deal, they don't believe they would lose the £25k contract if they were to say now, but want to help their customer that would otherwise have difficulties carrying the money over past year end.

It just feels like possible money laundering (ie not a straightforward transaction), with implications of a bribe (ie do this and you get the 25k for the project)

Comments

  • PGM
    PGM Font Of All Knowledge Registered Posts: 1,954
    No thoughts :(
  • Diddy Mau
    Diddy Mau Well-Known Registered Posts: 238
    Sorry PGM,
    this one is beyond my knowledge. I would like to ask though, why is contractor getting a £5K golden handshake (so to speak).
    This part does sound like a bribe. nothing to do with the World Cup? A lot of this going about there.......Apparently:huh:
  • PGM
    PGM Font Of All Knowledge Registered Posts: 1,954
    The contractor is only getting paid for work done. But my client customer can't carry the money past y/e, so has asked my client to hold the money and pay the contractor once it's done.

    So technically seems legit from my clients point of view, and based on the info they are aware of. But just feels a touch wrong, maybe with not being transparent or something...
  • Diddy Mau
    Diddy Mau Well-Known Registered Posts: 238
    Let's see if I'm reading this right:

    Company needs to spend budget by YE. Its paying Co-ordinator to assist (your client) to aid them. Get people involved pay etc...
    Your client gets paid £25k, plus £5k, to be paid to contractor, only once work done. After YE.

    Could your client have contract, stating they get paid £30k to run project, and your client will pay contractor out of the £30k. Maximum of £5k
    this way, funds for budget all spent up. No hidden objectives, everyone happy. Its a thought

    It does look ok, from what you say, but I totally understand the worry
  • PGM
    PGM Font Of All Knowledge Registered Posts: 1,954
    Diddy Mau wrote: »
    Let's see if I'm reading this right:

    Company needs to spend budget by YE. Its paying Co-ordinator to assist (your client) to aid them. Get people involved pay etc...
    Your client gets paid £25k, plus £5k, to be paid to contractor, only once work done. After YE.

    Could your client have contract, stating they get paid £30k to run project, and your client will pay contractor out of the £30k. Maximum of £5k
    this way, funds for budget all spent up. No hidden objectives, everyone happy. Its a thought

    It does look ok, from what you say, but I totally understand the worry

    Thanks yes that it. I think I've come to the same conclusion. Nothing wrong but it's still a bit of a dodge for the originators YE rules.....
  • Makkusu
    Makkusu Feels At Home BournemouthRegistered Posts: 94
    Is your client a limited company?

    Subcontracting is perfectly fine but it needs to be done correctly. Example being, Ltd (your client) draws up agreement with the end customer for completion of the project, issues £30k invoice, subcontractor issues £5k invoice to the Ltd.

    I would still dig deeper: are these companies linked in anyway? Check the shareholdings, question their relationships.

    It is fine for your client to hold the £5k, because agreement was drawn up between your client and the end customer for £30k acknowledging possible enlistment of subcontractors. If anything, it is odd (or stupid) of the subcontractors for wanting to carry out undocumented/unpaid for work. Payment terms can be agreed, but at the very least an agreement needs put in place.
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