Private Consultancy – A Guide for Academics

The University recognises that a broad portfolio of activities, including consultancy, is important to achieve long-term sustainability. The university consultancy route is encouraged where possible. This offers benefits to both the University (in terms of risk management, strengthening opportunities for engagement and the potential for future partnerships) and the member of staff (in terms of use of university resources, access to support, and reduced personal liability). However, it is recognised that private consultancy may also help you to raise your personal profile, establish new networks and be a precursor to collaborative research funding via the University. Private consultancy can provide useful personal income for you; however, you need to be aware of the potential risks and liabilities.

It is your decision whether to seek to undertake private consultancy. The University wishes to support you in making this decision and, in particular, to ensure that five central principles are followed (from the University’s Policy on Outside Work):

i. it must not impair the quality of the member of staff’s work at the University
ii. it must not bring the University into disrepute
iii. it must not put the University at financial risk
iv. it must not involve any other actual or perceived conflict of interest
v. it must not breach any statutory provision or other rights.

This document aims to provide you with all the necessary facts, and to clarify requirements and processes that apply specifically to you as a University of Bristol employee. It will ensure that you are in a position to make informed choices and apply processes to ensure that you carry out the work correctly, legally, and without compromising either yourself or the University.

What is Private Consultancy?

Private consultancy is the provision of expert/professional advice to external clients arranged privately by a member of staff. The contract for the work is set up directly between the member of staff and the client, without any involvement or support from the University. Income flows directly to the individual carrying out the work and they are responsible for the legal and tax implications arising from this income.

This type of work is classified as ‘outside work’, for which prior approval from the appropriate manager and declaration in accordance with the Outside Work policy is required.

The attached definition describes the kinds of work that are regarded as consultancy.

What are the potential risks of Private Consultancy?

Consultancy activity can expose you and potentially the University to a number of potential risks. The main ones are:

Risks for Individuals:

Risks for the University:

The role of the Decision Makers’

The main role held by the HoS/Dean is to protect the best interests of their staff and the School/Faculty, with a view to sustainability (and growth). As part of this, it is important for them to have a full overview of consultancy activities being undertaken, for a number of reasons:

Guidance and basic Procedures for Private Consultancy

In view of the risks outlined above, all staff are required to seek prior permission under the Outside Work policy before entering into any commitment to undertake private consultancy. Permission will not be unreasonably withheld – the purpose is to enable any such potential conflicts to be identified, assessed and where possible, resolved prior to any activity commencing. Please refer to the Outside Work policy for further details.

Legal obligations

Besides the obligations relating to your employment with the University, you must ensure that any private consultancy work is carried out legally. At its most basic level, this means that you must have an appropriate written contract between you and the client, and that contract must make it clear that the work is being carried out by you as an individual, not on behalf of the University.

Much of the time, you can carry out private consultancy work legally by registering yourself for self-employment for that aspect of your work, explaining that you are already in full employment. In order to do this, you need to contact HMRC and get a special tax reference. This will enable you to find out about the associated tax and National Insurance obligations, and what you need to do to fulfil them. You will also need to get advice from the tax office on keeping records relating to tax.
Another option, for instance if you have significant numbers of private consultancy contracts, is to set up a company to handle this aspect of your work. You will need to register the new company with Companies House. You will then need to appoint a company secretary, company directors, auditors and legal advisors for the company. You will also need to establish procedures for undertaking such work.

Insurance

When carrying out private consultancy, you carry the professional liability for any work that you do, and any problems, accidents or errors that arise for the client as a result. This is the case when providing expert advice, as well as carrying out specific activities. The University will not cover you for any of this liability, so you need to ensure that you have suitable professional indemnity in place that covers you for all the potential situations and costs that may arise (and remember that the latter could be very high).

Even if you have professional indemnity in place, there may be occasions when you need to take out additional insurance to cover yourself for specific liabilities. Always take good advice, and ensure that you are adequately covered for all work that you do.

Use of Resources

You should not use any university equipment, facilities or staff for private consultancy unless this has been formally agreed as set out below. If you do wish to make use of university resources, the University will wish to negotiate market rates for such provision, and will be under no obligation to agree to provide. In these instances, you will need to:

It is important that you do not use university telephones, e-mail accounts and signatures, the university address, headed stationery, etc for private consultancy, as they could imply that the contract is with the University, thus potentially leaving the University liable for any problems that may arise as a result of the work.

Costing and Pricing

When setting up a private consultancy contract, ensure that you cost your work properly, and that you charge a realistic price.

When costing, you need to include not only your time (and what value you put on this) and any materials or equipment used, but also any overhead costs, both direct and indirect such as travel, stationery, telephones and Internet use etc.

The price you set should reflect the market value of the work done. To determine this, you may need to do some research into what others are charging for similar work in this market, and benchmark your services against this. Be careful not to underestimate the market value of your work. Ask yourself what value the client is likely to place on the work, noting that they too will be seeking value for money. Whether you see this as a one-off with the client or the start of a long-term relationship will no doubt also influence what price you ask.

VAT Liabilities

If you earn more than £85,000 (2017) in private consultancy, you must register for VAT. There are distinct advantages as well as disadvantages in registering, depending on the status of your clients. If you find that there are significant advantages, you may be able to register for VAT with income below this threshold. Contact HMRC to register and find out more information.