Question about substitution

[Lance]

2 questions actually.

1) If I was to be used a substitute, and took instructions from the person substituting me, would that make my engagement with the substituter inside IR35? (Assume no further RoS, and SDC). NOTE: I am contracted to the substituter's company.

2) If a colleague at the same client has me as their substitute, and the client agrees (so completely unfettered RoS), does the fact that I am already engaged with the same client make that RoS he may invoke as no longer a RoS? I may well leave the client and maintain that option to be used, buit not for 6 months.

NOTE: These are different engagaments that I am doing in parallel.

[WordIsBond]

1) If I was to be used a substitute, and took instructions from the person substituting me, would that make my engagement with the substituter inside IR35? (Assume no further RoS, and SDC). NOTE: I am contracted to the substituter's company.

Technically, it may well put you inside IR35. Practically, would it matter? How much work as a substitute would you do? A one or even two month engagement inside IR35 is hardly going to be a big issue, you just pay your annual salary and pension contributions out of the proceeds.

2) If a colleague at the same client has me as their substitute, and the client agrees (so completely unfettered RoS), does the fact that I am already engaged with the same client make that RoS he may invoke as no longer a RoS? I may well leave the client and maintain that option to be used, buit not for 6 months.

NOTE: These are different engagaments that I am doing in parallel.

So you work for the client, someone else does also, and he wants you to substitute for him.

In CEST, it says the substitute "Was not from a pool or bank of workers regularly engaged by the end client." You'd have to try to argue that didn't apply to you. You MIGHT have a chance if you are working on a completely different project in a different department, and a different location might help a little bit. Then, you might be able to try to claim that it's not really the same end client. I doubt any insurer or client would want to rely on that kind of substitution.

This kind of arrangement might well be positive for IR35 in borderline cases. Using this kind of substitution is the kind of thing a business might do, and it does call into question whether they are really hiring personal service if they allow a substitute, even in this circumstance. Also, if HMRC is looking at company revenue vs expenses to filter IR35 targets, the guy paying a substitute might put himself on the right side of the filter. But if you are with the same end client already it almost certainly is not the silver bullet for IR35 that you and your mate would like it to be.

[Lance]

Technically, it may well put you inside IR35. Practically, would it matter? How much work as a substitute would you do? A one or even two month engagement inside IR35 is hardly going to be a big issue, you just pay your annual salary and pension contributions out of the proceeds.

So you work for the client, someone else does also, and he wants you to substitute for him.

In CEST, it says the substitute "Was not from a pool or bank of workers regularly engaged by the end client." You'd have to try to argue that didn't apply to you. You MIGHT have a chance if you are working on a completely different project in a different department, and a different location might help a little bit. Then, you might be able to try to claim that it's not really the same end client. I doubt any insurer or client would want to rely on that kind of substitution.

This kind of arrangement might well be positive for IR35 in borderline cases. Using this kind of substitution is the kind of thing a business might do, and it does call into question whether they are really hiring personal service if they allow a substitute, even in this circumstance. Also, if HMRC is looking at company revenue vs expenses to filter IR35 targets, the guy paying a substitute might put himself on the right side of the filter. But if you are with the same end client already it almost certainly is not the silver bullet for IR35 that you and your mate would like it to be.

pretty much what I reckon as well.

Cheers.

[Old Greg]

2 questions actually.

1) If I was to be used a substitute, and took instructions from the person substituting me, would that make my engagement with the substituter inside IR35? (Assume no further RoS, and SDC). NOTE: I am contracted to the substituter's company.

2) If a colleague at the same client has me as their substitute, and the client agrees (so completely unfettered RoS), does the fact that I am already engaged with the same client make that RoS he may invoke as no longer a RoS? I may well leave the client and maintain that option to be used, buit not for 6 months.

NOTE: These are different engagaments that I am doing in parallel.

Is there MOO?

[Lance]

Is there MOO?

no there isn't. And for case #2 I pass the CEST test on MOO (ie. new work can be agreed but must be in an updated contract/schedule).

[northernladuk]

2 questions actually.

1) If I was to be used a substitute, and took instructions from the person substituting me, would that make my engagement with the substituter inside IR35? (Assume no further RoS, and SDC). NOTE: I am contracted to the substituter's company.

2) If a colleague at the same client has me as their substitute, and the client agrees (so completely unfettered RoS), does the fact that I am already engaged with the same client make that RoS he may invoke as no longer a RoS? I may well leave the client and maintain that option to be used, buit not for 6 months.

NOTE: These are different engagaments that I am doing in parallel.

Looking at both those questions I question the whole engagement. Just on that alone, and I could be wrong, but it just looks like one of these sham agreements to get a sub in purely for IR35 purposes. It could be genuine but if it looks like a duck and quacks like a duck.

Why would you be taking instructions from the person that sub'd you? That doesn't sound right. You sub, they go, you do the work. Anything else looks like it's not a genuine substitution.

I'd also question the comment in bold. If it was a proper unfettered arrangement the client doesn't not have the option to 'agree'. That indicates a choice which happens to be positive. That is not an indication of an unfettered clause. That looks more like he's picked the right one for you but he had an option.

Something doesn't add up to me so I'd question how useful this is as an IR35 defense. If it's genuine and is needed just get on with it. If you are trying to score IR35 points then forget about it I'd say.

[WordIsBond]

If we're talking about now, I probably wouldn't bother unless it's just something you and your mate want to do for non-IR35 reasons.

If we're talking about doing it from April on for IR35 reasons, there's only one question that matters -- how does the client see it? If they see it as a substitution for purposes of CEST, then go for it, everyone's happy, and HMRC is not all that likely to challenge them if they've got a bunch of people inside and a few who are doing this outside.

[Lance]

Looking at both those questions I question the whole engagement. Just on that alone, and I could be wrong, but it just looks like one of these sham agreements to get a sub in purely for IR35 purposes. It could be genuine but if it looks like a duck and quacks like a duck.

It's two different engagements.

Why would you be taking instructions from the person that sub'd you? That doesn't sound right. You sub, they go, you do the work. Anything else looks like it's not a genuine substitution.

I'm going on the basis thay they have specced the work and if they need a sub (illness or whatever) they'll provide clear guidance on what is needed. I'm just spitballing really. It occured to me that the person who is the substitute isn't necessarily outside. Dunno really just floating the question.

Something doesn't add up to me so I'd question how useful this is as an IR35 defense. If it's genuine and is needed just get on with it. If you are trying to score IR35 points then forget about it I'd say.

On the second point, the guy who wants this arrangement thinks it solves IR35 for him. I'm not convinced but have other factors in my favour anyway.

[northernladuk]

On the second point, the guy who wants this arrangement thinks it solves IR35 for him. I'm not convinced but have other factors in my favour anyway.

Which is exactly what it looks like to me and will not stand up to any scrutiny so I'd be walking away from this one TBH.

[Lance]

Which is exactly what it looks like to me and will not stand up to any scrutiny so I'd be walking away from this one TBH.

I don't think I'll 'walk away' as such. It's the guy who signs my timesheets
I'll have a polite discussion with him over a beer about how it's not that likely to help.