Service Provider Agreement
“SC” The Sponsoring Company:
“SP” The Service Provider: Direct Business Management (GB) LLP of 20 Bold Street Warrington WA1 1HP
“SA” The Administrator: DB Risk Management LLP of Montrose House Clayhill Park Neston CH64 3RU
1. SP will provide advice in connection with Restructure, Risk Management, Exit Route Planning and various tax / NIC savings mechanisms. The SP or its agents will provide the necessary bespoke structures and procedures.
No Guarantee of Savings
2. While SP will make every effort to generate savings from any restructure and Exit Route strategies the SP cannot and does not guarantee to make any savings.
3a. SC will fully and correctly implement strategies that SC chooses (with any consequential structure and procedure) and SC will also fully and correctly implement any variations to the strategies SC chose if advised to do so by SP or SP’s agents.
3b. As soon as practicable SC will select the strategies SC want to implement and in any event SC will inform SP of SC’s choice within 3 months of the day when SP, by way of a presentation, offered various restructure strategies and the necessary structures and procedures in accordance with Clause 1 above.
3c Without prejudice to Clause 3b if at any time during the course of this Agreement SP or SP’s agents recommend other strategies to SC, SC will inform SP or SP’s agents of its choice within 3 months of the day SP or SP’s agents recommended the said other strategies.
3d SC agrees it will perform and be liable to perform its obligations under this Service Agreement until such time as this agreement is terminated.
3e SC agrees that SP or SP’s agents alone will deal with enquires from HMRC, DSS or any other Government agency in respect of or in connection with any taxi NIC mitigation strategy recommended by the SP and that SC will inform SP or SP’s agents at the earliest opportunity of (and in any event no later than 15 days after receiving) any correspondence from HM Revenue &Customs, DSS or any other Government agency.
4 SC will attend service meetings at least once every six months as requested by SP and a person capable of signing documents on behalf of SC, or on behalf of the revised structures implemented will attend.
5a. Unless a fixed fee has been agreed in writing, SP in aggregate will be entitled to a Fee made up as follows:
a) 1/3 of the any gross savings achieved as a result of the restructure throughout the lifetime of the Scheme and 1/3 of any increase in savings
b) Additionally 1/3 of the gross savings for the first 15 months and any increase in savings
c) A fee of £20 per month per member
d) 1% each year of any gross salary reduction/sacrifice
e) any fees charged separately by any agent of SP or any associated service provider, set out in a written engagement letter
5b Corporation tax savings (if any) made by reason of the issue of shares in a Share Incentive Plan (if such is implemented) shall be due to the SP exclusively.
6 VAT at the current rate will be chargeable where applicable.
7. The Fee shall become due on the last day of each month whether formally demanded or not and payable within 7 days of receiving the individual SP’s invoice(s).
8 Any Fee still outstanding on the first anniversary of the Service Agreement and each anniversary thereafter shall be settled by 4.00 pm on the second Friday of the month immediately following the month in which the anniversary date falls
9 In the event of SC not paying the Fee as set out above SC or SC’s agents shall hold the monetary amount of the Fee as bare trustee on trust for the benefit SP or SP’s agent or nominee.
10. Late payment of the Fee will attract interest at the rate set under the Late Payment of Commercial Debts (Interest) Act 1998 from time to time.
11. Should revised remuneration arrangements be enquired into by HMRC or become under challenge, dealing with HMRC in connection with PAYE visits, aspect enquiries or general day to day affairs of enquiries in connection with tax returns, shall be part of the service provided. Should enquiries go beyond this point, and it becomes necessary to provide extra resource in order to deal with such enquiries other reasonable charges will be made not exceeding £150 per hour plus expenses.
12. Payments can be made directly to the bank account nominated by SP and will be a sum calculated by SP. This sum can be paid into the account so that there can be cleared funds at least 5 working days before onward distribution.
a) SP will make known to SC the maximum amount available for distribution and SC will decide what amount is going to be paid and notify what payment will be made using the online facility.
b) A payment above the maximum amount will result in restitution being needed when Corporation Tax becomes due and may incur extra tax / NIC if those payments are regarded as loans.
c) If remaining balance permits, estimated Corporation Tax and any Class 4 NIC’s, together with SP fees on account will be set aside.
d) If it has been agreed in writing that a separate savings account be set up with the signatory independent of the company there will be a quarterly reconciliation and the aggregate sums due to members will be paid across to this account quarterly in arrears, i.e. sums due by the end of December paid over by the end of March, sums due by the end of March paid over by the end of June, etc. Corporation Tax due and sums on account of SP’s fees will be held in this account and will be paid directly by SP on behalf of the relevant company direct to HMRC or SP when due.
13. Interests on balances held shall accrue for the benefit of SP up to the date of transfer and SC or participants thereafter.
14. VAT invoices from the SP are payable on presentation.
15. It may have been agreed to pay for extra services, e.g. professional monitoring costs and insurance costs which were reflected in the illustration of benefits.
Limitation of liability
16. Neither SP nor its agents shall be liable to SC for any cost or expense or loss or damage incurred by SC as the result of the services provided by SP or SP’s agents and strictly without prejudice to the generality of the foregoing provisions of this paragraph SP or SP’s agents shall have no responsibility for any damage sustained by SC in respect of loss of profits, loss of market or opportunity or goodwill loss or damage of SC’s customers or any other compensation which in the absence of this clause SC would or might be entitled to recover at law.
17. SP’s or SP’s agents’ liability to the SC in respect of any breach of contract, statutory duty or any negligent or otherwise tortious act of the Service Providers (or any of them) and/or their agents shall in every case (except for death or personal injury) be limited to the highest of the total invoice price of the services provided and paid. SP and SC note that SC has had the opportunity to take independent legal and accountancy advice prior to entry into this agreement. The contracting parties are those set out at the head of this agreement and no third party (whether servant or agent of SP or otherwise) shall have any liability to SC whatsoever in connection with this agreement.
18. To the extent that by Statute contracting parties’ rights to enter into their bargain are now or hereafter curtailed and any test of reasonableness or similar standard is applied to the terms agreed between SP or SP’s agents and SC with respect to exclusion of heads of damage and limitation and/or exclusion of liability SC shall be deemed to have acknowledged that the SP or SP’s agents are (save with respect to death, injury and physical damage) their own insurer of negligent services in accordance with the Service Agreement and as such are not prepared to accept risks associated with SC’s business Accordingly SC agrees that at Its option it will either insure elsewhere or itself accept the further risks of damage and/or negligent services.
18a. For the avoidance of doubt, SA provides services in connection with incorporation and establishment of structures, VAT registration, preparation of accounts and tax returns. SA provides no advice in connection with the restructure nor with compliance requirements. Accordingly, SA shall have no responsibility for any losses, howsoever arising from the restructure.
19. For a period of 2 years after the final distribution of the strategy, the company or business of the SC will not continue or enter into any other remuneration planning strategies without the consent in writing of the SP, such consent not to be unreasonably withheld upon the SC paying a fee calculated at two thirds of the fees charged under clause 5(a) above for the first 6 months of the Scheme plus VAT.
20 Charges will normally be collected over the term of the Agreement but a balance may be owing on early cessation. The various brochures and illustrations will reflect estimated savings less estimated costs. Strategies are as outlined in the current version of various brochures which are subject to change without notice.
21. This Agreement may be assigned by SP without notice.
22 In the event of any dispute SC and SP will jointly select an accountant from the Panel of the ICAEW (or any successor body) to determine the said dispute. SC and SP shall be jointly liable for the Accountant’s fees and his/her decision shall be binding between both parties subject only to the demonstration of manifest error of law and/or fact.
23. This Agreement constitutes the entire agreement between the Parties relating to the subject matter of the Contract. The Contract supersedes all prior negotiations, representations and undertakings, whether written or oral, except that this Clause shall not exclude liability in respect of any fraudulent misrepresentation.
24. If any provision of this agreement is held invalid, illegal or unenforceable for any reason by any court of competent jurisdiction, such provision shall be severed and the remainder of the provisions of this Agreement shall continue in full force and effect as if this Agreement had been executed with the invalid, illegal or unenforceable provision eliminated.
25. In the event of a holding of invalidity so fundamental as to prevent the accomplishment of the purpose of this Agreement, the Parties shall immediately commence negotiations in good faith to remedy the Invalidity
Termination on Notice or by Default
26. After the 30 day Cooling Off period the contract will run indefinitely for a minimum of 15 months with either party giving six months notice in writing after nine months. In the event that the SC fails to give notice, SP shall be entitled to damages equivalent to the higher of fees charged during the first six months of the scheme or the fees charged during the most recent six months.
27. If the Agreement is terminated, SP will complete the administration to the end of the 6 months notice period upon receipt of outstanding charges. In the event of the Agreement being terminated other than by SP or SP’s agents, SP or SP’s agents shall be entitled to the balance of charges in accordance with clause 26.
28. SP or SP’s agents may terminate this Service Agreement if:
a) SC is in material breach of this agreement and in particular clause 3 by giving 90 days notice specifying the breach and requiring its remedy if capable of being remedied and this Service Agreement shall be deemed terminated if SC fails to remedy the said breach; or
b) SC alters the strategy such that the savings are reduced by more than 20% unless such alteration is recommended by SP; or
c) the default is a fundamental breach of the Service Agreement.
In the event of termination under this clause, SP shall be entitled to damages equivalent to the higher of fees charged during the first six months of the scheme or the fees charged during the most recent six months.
29. SC may terminate the Service Agreement by written notice to SP with immediate effect if any Service Provider commits a Default and if:
a) the Service Provider in question has not remedied the Default within 30 days, or such other period as may be agreed between SC and the Service Provider in default, after issue of a written notice specifying the Default and requesting it to be remedied if capable of being remedied; and
b) the default is a fundamental breach of the Service Agreement.
30. Termination under clauses 28 and/or 29 is without prejudice to any parties’ rights or remedies under the Service Agreement and a failure to exercise such rights or remedies upon termination shall not amount to a waiver of such rights or remedies
Cooling off period
31. For 30 days after the signing of this agreement either party may withdraw. All monies paid by SC will be repayable and SP or SP’s agents will no longer be under any obligation to provide services.
Jurisdiction and Applicable Law
32. English Law and the exclusive Court jurisdiction of the English Courts will apply to this Agreement.