The Client is a UK recruitment company specializing in contract placements within telecommunications.
The Client was placing both international and local contractors on a Telecommunications Engineering project (4G rollout) in California, Connecticut and Missouri in the USA. The contractors were divided into 5 teams of 4 contractors consisting of 3 riggers and 1 engineer per team. Due to the number of similar projects being rolled out across the country at the same time it was imperative that the candidates were signed up immediately to avoid them moving on to other projects. The client needed the candidates employed, pay-rolled and for the relevant insurances to be in the place for each job title prior to commencement of the assignment. Further they needed our local US partner to invoice their US client and pay their margin to the UK. The US clients payment terms were 60 days meaning our US partner were also funding the contractors pay-rolls between payments
Each contractor was to be paid different daily rates, had differing personal circumstances and different tax requirements requiring in-depth consultancy with each candidate before commencing their assignments.
The Client was not experienced with US employment law, taxation, immigration or insurance and was not incorporated in the USA. They were unable to provide sponsorship or local payroll. Further they needed a company to invoice their client on their behalf in the US then pay their margin to the UK, the local company would also have to fund the pay-roll of the contractors as their clients payment schedule was 60 days and by law the contractors had to be paid monthly.
The Client contacted Contractor Taxation Ltd and we engaged our local partner in the USA. Using the contractor’s gross daily rate, the location of their assignment, their usual state or nationality of residence and desired start date we gave the client a quote on net earnings and a detailed action plan for proceeding. This was supplied within 1 business day and included the grossed up figures including the UK Recruitment Agencies margin so they could provide their client with a fully inclusive quote.
Two of the 20 contractors were from Canada and hence required TN1 Visas to commence their assignments. We liaised with each candidate (one was in Scotland) and arranged to have the TN1 visas approved within 3 days to meet the project timelines.
Once the recruiter had given preliminary approval to the proposal our local partner had a detailed conversation with the contractor to ensure they understood the process, their expected net retentions and agreed to proceed. Through our and our partners expertise in USA tax laws (they were able to apply the Living Away from Home Allowance to all contractors eligible), the contractor was assured of the highest possible retention rate on their earnings. Additionally they were fully compliant with all relevant tax, employment and immigration law.
The Client worked with both Contractor Taxation Ltd and our US partner to agree a specific contract template which ensures the contractors are bound by the necessary contractual terms. Within hours of each contractor accepting The Client’s offer we had them setup in our partners invoicing and payment system and sent through the signed contracts.
Our local partner sourced extra insurance for the ‘riggers’ specific to this assignment at their own expense ensuring that all parties were fully covered for an eventuality.
Each month the contractors sent their timesheets to our US partners head office in NYC through their online portal, along with their expenses reports. The contractors were then paid within 7 days on the date required by law in each state and all local taxes and social security contributions were paid to the relevant authorities each month. Our US partner generated an invoice based on these timesheets and sent it to US Client, on receipt of payment our UK Clients margin was paid to their UK account.
Both the contractors and client had access to detailed reporting on invoices, payments and expense processing. This included scanned confirmation of payment for the individual tax and social security relating to the contractors employment, as requested by the end customer.
The local partner also provided the contractors with end of financial year and end of assignment statements to use with their tax reporting.
The Client was able to secure the project, have a US entity invoice their client on their behalf whilst ensuring their contractors were being paid in a compliant and tax efficient manner.
The US Client was/is rolling out their 4G project with the requisite staff in a highly competitive market. They plan on further rollouts across the US and will be using our UK Client as the primary source of recruitment.
The contractors benefited from great retentions on their gross daily rates, prompt payments and could be comfortable they had the requisite insurances in place and were being paid tax efficiently yet fully compliantly within IRS regulations.
Products and services our company used
- International tax advice
- Local Pay-rolling - Calculation of net earnings
- TN1 Visa sponsorship
- Local Invoicing
- Margin Only Invoicing
- ‘Factoring’/deal financing
- Calculation, filing and reporting of tax and social security for employer and employee
- Expense Processing
Services provided by other groups or companies
Contractor Taxation used the service of our preferred US partner who acted as the contractor management company on this project.