Exchequer solutions- SDC - How can WE HELP?

10
solutions Discover the right solution for you CIS UMBRELLA PAYE FREELANCE Understanding Supervision, Direction and Control (SDC) LIMITED

Transcript of Exchequer solutions- SDC - How can WE HELP?

Page 1: Exchequer solutions- SDC - How can WE HELP?

solutions

Discover the right solution for you

CIS

UMBRELLA

PAYE

FREELANCE

Understanding Supervision, Direction and Control (SDC)

LIMITED

Page 2: Exchequer solutions- SDC - How can WE HELP?

“We have been working with Exchequer Solutions for the last 2 years and we have found their customer services for both ourselves and our candidates to be of a very high level. Queries and requests are dealt with quickly and efficiently with an ‘always happy to help’ attitude. They are able to offer our candidates an affordable service without lowering standards and we look forward to continual work with them.” Amanda

It’s all about SDC

From April 2016

all agencies will

have to assess their

workforce before

deciding which

routes they will make

available to them.

In an ever changing

landscape we are here

to help you make the

correct decision and have a

compliant option available

for every circumstance.

From April 2016 legislation

will require agencies to

consider the Supervision, Direction and Control (SDC) status of their workforce

as to the manner in which

services are provided – in

essence this will mean

considering whether it is

intended that the end client

is supposed to (or has the

right to) tell the operatives

HOW to complete their

work, or whether it is

intended that the operatives

have the skills and

experience to know HOW to

complete their work.

“We have been working with Exchequer Solutions for the last 2 years and we have found their customer services for both ourselves and our candidates to be of a very high level. Queries and requests are dealt with quickly and efficiently with an ‘always happy to help’ attitude. They are able to offer our candidates an affordable service without lowering standards and we look forward to continual work with them.” Amanda

This assessment, together with the contractual terms that are put in place, are the key element of the decision making process, we urge you to assess your workforce as soon as possible and to continue doing so on an on-going basis. If you need assistance we’re happy to help and

can enlist the help of our Tax Advisors if required.

Where SDC is in place then access to expenses is restricted and CIS is not available,

where SDC is not in place then all options are available. It is vital that SDC is

considered in conjunction with your end clients as the T’s and C’s will have to reflect

the intentions of all parties.

Once the workforce has been assessed it’s a case of offering the appropriate options

to the relevant workers. For some this may well mean a negative change in their take

home pay, for others they may take the opportunity to incorporate or work on a

self-employed basis and actually benefit from the change.

T 0844 846 5007 E [email protected] W www.exchequersolutions.co.uk Text 07537 415 280 Exchequer Solutions Limited 1st Floor, The Exchange, 1 St John Street, Chester CH1 1DA

Page 3: Exchequer solutions- SDC - How can WE HELP?

Low paid workers. John is currently earning £8.55 an hour, he found his role through a recruitment agency

and is currently being paid PAYE through Exchequer. John won’t really feel the impact of

the changes to travel and subsistence as he hasn’t been earning enough to benefit from

claiming expenses. For John and other individuals in his situation (generally workers on

£9.15 an hour or less) no action is needed. They can continue to be paid PAYE or umbrella

by Exchequer and will still benefit from our excellent customer service and we will

continue to take responsibility for ensuring compliance and the administrative burden of

RTW, pension, pay calculations, employer’s liability etc.

Medium pay. Sarah has been working for £11.75 on a temporary assignment. She is managed while

carrying out her day to day tasks so is subject to supervision, direction and control (as are

the majority of workers in this pay bracket, £9.15-£11.75 per hour). Unfortunately she will

feel the impact of the changes as she will no longer be able to claim expenses for the cost

of travelling to her current temporary assignment or for her lunches.

Broadly speaking we’re finding most workforces being assessed roughly as follows;

T 0844 846 5007 E [email protected] W www.exchequersolutions.co.uk Text 07537 415 280 Exchequer Solutions Limited 1st Floor, The Exchange, 1 St John Street, Chester CH1 1DA

For workers like Sarah there is no reason to make any changes, they can still be engaged

on the Exchequer Umbrella or PAYE arrangement but with very limited expenses. Sarah

will still have access to some expenses as it is only travel and subsistence that is being

restricted under the new legislation. Exchequer can take on all employer liabilities, RTW

checks, pension processes and offer the worker the status of an employee.

As we will have less work to do in terms of expenses we’re happy to discuss discounted

margins for workers like Sarah where appropriate.

High Pay (£11.75 and above). Simon is a skilled tradesman and usually works for an hourly rate of £18. Whilst skilled

tradespeople and those on a higher hourly rate are more likely to manage their own work,

their pay rate alone does not confirm a lack of SDC.

Simon is not subject to supervision, direction or control and as such can continue to

work as an umbrella employee and claim expenses for travel and subsistence just as he

has done previously. Someone like Simon might also want to consider setting up as a

limited company to benefit from further tax efficiencies. For others who work within the

construction sector and can demonstrate a lack of SDC, CIS is also a valid option.

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T 0844 846 5007 E [email protected] W www.exchequersolutions.co.uk Text 07537 415 280 Exchequer Solutions Limited 1st Floor, The Exchange, 1 St John Street, Chester CH1 1DA

Even if it is felt that SDC applies then a

PSC may well still be a viable option for

the contractor as this requires a slightly

different test, IR35 – again we can help

via our Chartered Accountancy division.

We can support you and your workers whatever

their situation, we have created a suite of

options so there is a suitable route for everyone.

We aim to make life easier and simpler for our

recruitment clients by being in a position to

offer our services to all your workers.

The benefits for recruiters• We are fully compliant with all the latest

legislation

• One point of contact but a range of options for

your workers

• Minimal disruption – we will take care of

advising your workers, ensuring they are on a

scheme that suits them

• Extensive experience of working with

contractors

• Peace of mind that our sister company

Exchequer Accountancy are Chartered

Accountants

Is the worker subject to Supervision, Direction or Control?When considering Supervision, Direction or Control (SDC) you are required to determine whether the operative being placed is subject to (or the right to) Direction, Control or Supervision as to the manner in which they provide their services.

In essence this means considering HOW they provide their services.

If they can be told HOW to do their work then they must have PAYE and NI administered when they are paid and cannot claim T&S expenses, if not then they can legitimately be engaged on a self-employed basis or via ‘Umbrella’ with full access to expenses.

Identifying if workers are subject to SDC enables you to discover what payment routes are available.

Umbrella:

PAYE:

CIS:

Not subject to SDC Subject to SDC

Umbrella:

Limited:

If a worker is considered to be to subject

to SDC, the following routes are available.

If the worker is not subject to SDC then the

following routes are available.

a worker who is

subject to SDC can still be registered as an

umbrella employee but cannot claim tax

for travel & subsistence.

ideal for your lower paid

workers. Register your workers on our PAYE

scheme and we will take care of paying

them every week. They will always be paid

NMW or NLW plus holiday pay (this can be

rolled up or retained, but will always be

paid out in full). We will also pay ERNI

to HMRC.

If the worker is in the

construction sector.

an umbrella

employee who is not subject to SDC can

still claim tax for travel & subsistence.

for workers with a rate

above £12 an hour this is often the most

tax efficient approach - Also an option for

these where there is SDC as there is a

different test when working as a Ltd

Co contractor.

Page 5: Exchequer solutions- SDC - How can WE HELP?

T 0844 846 5007 E [email protected] W www.exchequersolutions.co.uk Text 07537 415 280 Exchequer Solutions Limited 1st Floor, The Exchange, 1 St John Street, Chester CH1 1DA

Umbrella: A worker who is

subject to SDC can still be registered as

an umbrella employee but cannot claim

tax relief for travel and subsistence.

An umbrella employee who is not subject

to SDC doesn’t need to do anything.

They can continue on an umbrella

scheme and will still be able to claim tax

for travel and subsistence. They can also

consider CIS or PSC if they wish and if

appropriate.

CIS: CIS is a viable option

for construction workers who can

demonstrate that they are not subject to

supervision, direction and control.

CIS can be a tax efficient approach for

people who work in the construction

sector and meet all the relevant criteria.

If you are dealing with workers who are

self-employed, work on contracts and

decide how and when their work is carried

out and aren’t supervised then this may be

the route for them.

If you are concerned about CIS rest

assured we will ensure each individual

meets the criteria before registering

them. We can also offer agencies CIS

insurance which should give you peace

of mind.

The routes available

PAYE: This is our straight forward

solution for paying your lower paid

workers. You can fix your labour costs at

just £8.89 an hour for those who are 25

and over (£8.25 for workers under 25) and

let us do the rest.

We employ the workers and take on

all of the administrative costs, such as

registration, payroll, payslip posting, and

bank charges and RTI.

We will pay the workers national living

wage (or national minimum wage for

under 25s) plus holiday pay (this can be

rolled up or retained, but will always be

paid out in full). We will also pay ERNI to

HMRC.

After we’ve done this, a small amount of

money will be left which we will retain as

our margin.

* We have a variety of margin calculations available based upon volume, complexity etc

Limited: Setting up a Limited

company is often the most tax efficient

approach for workers with a pay rate

of above £12 an hour and provides

the contractor with complete control

over their own affairs. It also offers

agencies a risk free route as the burden

of compliance on the contractor

themselves. Again contractual terms are

important and we can help if required.

Our sister company Exchequer

Accountancy Solutions are chartered

accountants specialising in accountancy

services for contractors working

through Ltd companies. They can help

contractors with everything from guiding

them through the initial process of

incorporating a company to supporting

them in the ongoing administration and

accounts for their business.

Over the next few pages we help to explain what to expect from your payslip for each of the routes available.

Page 6: Exchequer solutions- SDC - How can WE HELP?

Your PAYE payslip explainedThere is quite a lot of essential information on a payslip. Here’s how your payslips will look and an overview of what is included.

Continues overleaf ...

solutions

Company Name1

Payroll no. The unique number which identifies you.

2

Agency The number which identifies your recruitment agency.

3

Salary paid Your salary payment this week. You are taxed on this amount plus any Holiday Pay Paid.

4

Holiday payment Your holiday pay is subject to Tax and National Insurance.

5

PAYM

ENTS

DED

UC

TIO

NS

Gross pay for tax The amount subject to tax and NI deductions.

6

Tax deducted The amount you have paid in tax this week to HMRC.

7

Year to date In the YTD column you can see the total amount you have paid in tax and National Insurance so far this tax year.

9

Date The date your pay was processed.

10

Net Pay The amount of money you take home after any deductions.

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Payment Breakdown

A) Total income to the company The amount paid to Exchequer Solutions by your agency.

B) Employer NI paid to HMRC Employer NI contribution paid to HMRC.

C) Margin The amount we retain as a margin.

D) Total available for salary This is the amount payable to you via salary and holiday pay.

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solutionssolutionssolutions

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1 2 3

4

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XX123456X

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NI contribution The amount you have paid in National insurance this week.

8

1000L/Week 1

Your PAYE payslip explainedThere is quite a lot of essential information on a payslip. Here’s how your payslips will look and an overview of what is included.

Continues overleaf ...

solutions

Company Name1

Payroll no. The unique number which identifies you.

2

Agency The number which identifies your recruitment agency.

3

Salary paid Your salary payment this week. You are taxed on this amount plus any Holiday Pay Paid.

4

Holiday payment Your holiday pay is subject to Tax and National Insurance.

5

PAYM

ENTS

DED

UC

TIO

NS

Gross pay for tax The amount subject to tax and NI deductions.

6

Tax deducted The amount you have paid in tax this week to HMRC.

7

Year to date In the YTD column you can see the total amount you have paid in tax and National Insurance so far this tax year.

9

Date The date your pay was processed.

10

Net Pay The amount of money you take home after any deductions.

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Payment Breakdown

A) Total income to the company The amount paid to Exchequer Solutions by your agency.

B) Employer NI paid to HMRC Employer NI contribution paid to HMRC.

C) Margin The amount we retain as a margin.

D) Total available for salary This is the amount payable to you via salary and holiday pay.

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NI contribution The amount you have paid in National insurance this week.

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1000L/Week 1

Your PAYE payslip explainedThere is quite a lot of essential information on a payslip.

Here’s how your payslip will look and an overview of what is included.

T 0844 846 5007 E [email protected] W www.exchequersolutions.co.uk Text 07537 415 280 Exchequer Solutions Limited 1st Floor, The Exchange, 1 St John Street, Chester CH1 1DA

Your PAYE payslip explainedThere is quite a lot of essential information on a payslip. Here’s how your payslips will look and an overview of what is included.

Continues overleaf ...

solutions

Company Name1

Payroll no. The unique number which identifies you.

2

Agency The number which identifies your recruitment agency.

3

Salary paid Your salary payment this week. You are taxed on this amount plus any Holiday Pay Paid.

4

Holiday payment Your holiday pay is subject to Tax and National Insurance.

5

PAYM

ENTS

DED

UC

TIO

NS

Gross pay for tax The amount subject to tax and NI deductions.

6

Tax deducted The amount you have paid in tax this week to HMRC.

7

Year to date In the YTD column you can see the total amount you have paid in tax and National Insurance so far this tax year.

9

Date The date your pay was processed.

10

Net Pay The amount of money you take home after any deductions.

11

Payment Breakdown

A) Total income to the company The amount paid to Exchequer Solutions by your agency.

B) Employer NI paid to HMRC Employer NI contribution paid to HMRC.

C) Margin The amount we retain as a margin.

D) Total available for salary This is the amount payable to you via salary and holiday pay.

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1 2 3

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XX123456X

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NI contribution The amount you have paid in National insurance this week.

8

1000L/Week 1

Your PAYE payslip explained continued...

T 0844 846 5007 E [email protected] W www.exchequersolutions.co.uk Exchequer Solutions Limited, 1st Floor, The Exchange, 1 St John Street, Chester CH1 1DA

Timesheet Analysis This shows the breakdown we receive from the agency. Units = the number of hours Price = the hourly rate Value = the total

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Expenses C/F The amount of expenses claimed (year to date) that you will be able to claim tax relief on at the end of the financial year.

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Page 7: Exchequer solutions- SDC - How can WE HELP?

Your payslip explainedThere is quite a lot of essential information on a payslip. Here’s how your payslips will look and an overview of what is included.

Continues overleaf ...

solutions

Company Name1

Payroll no. The unique number which identifies you.

2

Agency The number which identifies your recruitment agency.

3

Salary paid Your salary payment this week. You are taxed on this amount plus any Holiday Pay Paid.

4

Expenses paid The expenses you have claimed this week (your expenses aren’t subject to Tax or National Insurance.)

5

Holiday payment Your holiday pay is subject to Tax and National Insurance.

6

PAYM

ENTS

DED

UC

TIO

NS

Gross pay for tax The amount subject to tax and NI deductions.

7

Tax deducted The amount you have paid in tax this week to HMRC.

8

Year to date In the YTD column you can see the total amount you have paid in tax and National Insurance so far this tax year.

10

Date The date your pay was processed.

11

Net Pay The amount of money you take home after any deductions.

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Payment Breakdown

A) Total income to the company The amount paid to Exchequer Solutions by your agency.

B) Employer NI paid to HMRC Employer NI contribution paid to HMRC.

C) Margin The amount we retain as a margin.

D) Total available for salary This is the amount payable to you via salary and expenses.

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1 2 3

4

5

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8

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NI contribution The amount you have paid in National insurance this week.

9

1000L/Week 1

Your Umbrella payslip explainedThere is quite a lot of essential information on a payslip.

Here’s how your payslip will look and an overview of what is included.

T 0844 846 5007 E [email protected] W www.exchequersolutions.co.uk Text 07537 415 280 Exchequer Solutions Limited 1st Floor, The Exchange, 1 St John Street, Chester CH1 1DA

T 0844 846 5007 E [email protected] W www.exchequersolutions.co.uk Exchequer Solutions Limited, 1st Floor, The Exchange, 1 St John Street, Chester CH1 1DA

Timesheet Analysis This shows the breakdown we receive from the agency. Units = the number of hours Price = the hourly rate Value = the total

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Expenses Analysis A breakdown, by type, of the expenses we have processed for you this week.

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Expenses C/F The amount of expenses carried forward after we have reached the legal limit that we can process.

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TIMESHEET ANALYSIS

Ref Rate Type ValuePriceUnits

Standard Hourly Rate 12.00 46.00 552.0033254

552.00Total paid this period

EXPENSES ANALYSIS

0.00Expenses b/f

Allowable expenses analysis

Miles 99.0008/06/201424052

Expenses C/F 0.00

99.00Total Expenses Paid

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Your Umbrella payslip explained continued...

Page 8: Exchequer solutions- SDC - How can WE HELP?

Your Limited calculationThere is quite a lot of essential information on a payslip.

Here’s how your payslip will look and an overview of what is included.

Exchequer Accountancy Services Ltd1st Floor, The Exchange1 St John StreetChesterCH1 1DA

Telephone: 033 3323 119

Name:

Company name:

Weekending date:

MONEY IN

Total Amount Of Invoices Raised Inc VAT

Net Total Of Invoices Raised

Total Amount Of VAT

Personal Expenses

Business Expenses

Salary

Total

Operating Profit Including Flat Rate Benefit

Corporate Tax

PAYE

1,080.00

900.00

180.00

200.00

29.08

204.00

433.08

490.32

Money Available to Draw (Salary + Expenses + Dividends)788.26

Money OutMONEY OUT

Money OutWHAT’S LEFT?

Money OutWHAT DOES MY COMPANY OWE?

TOTAL AMOUNT OF TAX

How much does my company still owe Me?

Expenses

Salary

Total

98.06

4.00

102.06

200.00

200.00

400.00

Total cash in the company1

Hours / days worked x rate2

VAT @ 20%3

Personal expenses4

Accountancy fee5

Salary6

Total of above money out7

Money left before tax8

Tax due9

NI contribution10

Total tax due11

Money company owes director

12

Total money available13

T 0844 846 5007 E [email protected] W www.exchequersolutions.co.uk Text 07537 415 280 Exchequer Solutions Limited 1st Floor, The Exchange, 1 St John Street, Chester CH1 1DA

Still unsure on how this affects take home pay?

Check out our helpful take home pay comparison chart on the next page.

Page 9: Exchequer solutions- SDC - How can WE HELP?

Financial Comparison ChartAll examples based on

a 40 hour weekThese calculations include

our standard marginThese calculations include

our standard margin

These calculations include 50% of our

standard magin

Hourly Rate Umbrella with £75 expenses

Umbrella no expenses

Umbrella no expenses with reduced margin

Take Home Pay Take Home Pay Take Home Pay

£9.00 £282.76 £275.00 £280.94

£9.50 £302.76 £287.07 £293.01£10.00 £322.76 £298.93 £304.87

£10.50 £341.00 £310.80 £316.94

£11.00 £353.07 £322.87 £328.80

£11.50 £364.94 £334.74 £340.86

£12.00 £377.01 £346.80 £352.73

£12.50 £388.07 £358.67 £364.59

£13.00 £400.94 £370.73 £376.67

£13.50 £412.80 £382.60 £388.53

£14.00 £424.67 £394.46 £400.60

£14.50 £436.73 £406.53 £412.46

£15.00 £448.59 £418.39 £424.53

£15.50 £460.66 £430.45 £436.39

£16.00 £472.52 £442.33 £448.26

£16.50 £484.40 £454.39 £460.32

£17.00 £496.46 £466.23 £472.19

£17.50 £508.33 £478.12 £484.26

£18.00 £520.39 £490.19 £496.13

£18.50 £532.26 £502.05 £508.19

£19.00 £544.32 £514.12 £520.05

£19.50 £556.19 £525.98 £531.92

£20.00 £568.05 £538.05 £543.98

Umbrella with £75 expenses

Easy admin for worker. Increased Net Pay. Pension, liability, admin etc with Exchequer.

Has to be a lack of SDC.

Umbrella no expensesEasy admin for worker. One employer. Exchequer has all liability for employment rights etc and all admin burden.Not as financially attractive as Umbrella with expenses.

Umbrella no expenses with reduced margin

Easy admin for worker. One employer. Exchequer has all liability for employment rights etc and all admin burden. Not as financially attractive as Umbrella with expenses.

These calculations include our

standard margin

Includes FRS VAT (14.5%) and our top

package @ £105 per month.

Includes FRS VAT (14.5%) and our top package @

£105 per month.

Assumes the agencies cost of sale will remain the same.

These calculations include 50% of our

standard magin

CIS PSC inside of IR35 PSC Outside of IR35 Agency PAYE Cost to Agency

Take Home Pay Take Home Pay Take Home Pay Take Home Pay Cost to Agency

£272.80 £275.77 £320.02 £287.38 £360.00

£288.80 £292.84 £336.44 £299.62 £380.00

£304.80 £300.32 £352.86 £311.35 £400.00

£320.80 £312.59 £369.27 £323.44 £420.00

£336.80 £324.65 £385.69 £335.68 £440.00

£352.80 £336.92 £402.10 £347.22 £460.00

£368.80 £349.19 £418.52 £359.73 £480.00

£384.80 £361.46 £434.94 £371.19 £500.00

£400.80 £373.73 £451.35 £383.28 £520.00

£416.80 £385.99 £467.77 £395.17 £540.00

£432.80 £398.26 £484.18 £407.06 £560.00

£448.80 £410.53 £500.60 £419.14 £580.00

£464.80 £422.79 £517.02 £431.03 £600.00

£480.80 £435.07 £533.43 £443.12 £620.00

£496.80 £447.34 £549.85 £454.66 £640.00

£512.80 £459.60 £566.26 £466.74 £660.00

£528.80 £471.87 £582.68 £478.63 £680.00

£544.80 £484.13 £599.10 £490.72 £700.00

£560.80 £496.40 £615.51 £502.61 £720.00

£576.80 £508.68 £631.93 £514.48 £740.00

£592.80 £520.94 £648.34 £526.55 £760.00

£608.80 £533.21 £664.76 £538.41 £780.00

£624.0 £545.48 £681.18 £550.48 £7800.00

CISEasy admin for worker. Increased Net Pay. No AWR issues etc. Popular with contractors.Has to be a lack of SDC.

PSC inside of IR35 Contractor has PSC vehicle for non IR35 contracts. No risk to Agency.Financially neutral.

PSC Outside of IR35Best Net Pay position. Contractor has more choices. Can contract with agencies or clients. No risk for agencies.Suitable for genuine contractors. Potential admin burden for agencies in receiving multiple invoices.

Agency PAYE Low net pay. Liability or RTW checks, pension, AWR, advances and administration with the agency. Worker may have an Umbrella co. already.

T 0844 846 5007 E [email protected] W www.exchequersolutions.co.uk Text 07537 415 280 Exchequer Solutions Limited 1st Floor, The Exchange, 1 St John Street, Chester CH1 1DA

Page 10: Exchequer solutions- SDC - How can WE HELP?

T 0844 846 5007 E [email protected] W www.exchequersolutions.co.uk Text 07537 415 280

Exchequer Solutions Limited 1st Floor, The Exchange, 1 St John Street, Chester CH1 1DA

Account ManagementTel: 01244 563 [email protected]

SalesTel: 01244 563 [email protected]

CISTel: 01244 563 [email protected]

PAYETel: 01244 563 [email protected]

Customer ServiceTel: 01244 500 [email protected]

Limited – Exchequer Accountancy Services Tel: 033 3323 [email protected]

Get in touch to find out how we can help.

We want to minimise confusion and help our recruitment partners, hopefully saving

you time and hassle! We’re happy to speak to contractors and discuss their individual

circumstances with them directly. Do feel free to pass on our details to any of your

colleagues or workers who have questions or need advice.