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taking on self employed brokers

Hi, I'm currently thinking of taking on a self employed broker. 

Just wondering for those who have self employed brokers how you deal with their monthly costs ie sourcing system, PI, compliance etc. as initially they would have no commission until the pipeline builds up.

Do you take it into account from the commission split or have the broker pay a monthly fee or a combination of both?

If you charge a monthly fee would then VAT be an issue? or could you get around this by getting the broker to pay the 3rd parties directly?


We are VAT exempt.

I am potentially taking on another broker and just taking a cut of what they earn. I will take the hit on the costs, if they are not earning within 3 months chances are they will not be doing the job for very long anyway - PI is based on the previous years turnover so them not earning in the interim should not be a problem. 

Compliance - how much are they going to incur in costs if they are not earning that much?

It is only really a CRM/Sourcing system that you are forking out which if you are looking to grow, I am sure you can afford to take a risk on. 

I am doing this right now too.

Make sure you cover all bases, there's loads to do in terms of T&C (especially if they are not CAS) and it will take a lot of your time, make sure it's worth it.

Re VAT - someone once told me that if you take your fee upfront (like the sensible among us), it is subject to VAT. I never researched it myself, any tax wizards out there?

wondering then for those who are with networks, do they charge VAT on the monthly fees paid by brokers?

From what I remember (and the HRMC web site isn't as clear as I thought it was) - if you provide advice - without the intention of a transaction occurring, it is VATable.

If the intention is for a transaction to occur and so charging a fee at the DIP stage, would seem to meet that requirement - although a fee for just research might not.

On what to charge  - as others have said - basic T&C will cost you time, even if they don't do much business - but if you charge too much, people will not join.

Do you buy in compliance support - or do you have necessary T&C/Compliance skills/knowledge?


Thanks for your replies.

I was initially thinking of charging a monthly fee and then paying a higher % on commission but then not sure now. Think I will need to get some advice re VAT.

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