Who has actually used the substitute clause? Especially in banks

[KentDogWalker]

In these modern IR35 proof contracts we have the rights to provide substitute devs.

The tricky thing is that banks have complex onboarding process for even contractors, so I need to think if it's workable. Eg Disclosures and address checks + a million forms

Can anyone who has provided a substitute share their wisdom?

[simes]

Good question.

Not only banks but, to be fair, any large blue chip will have complicated onboarding processes with rules dictating that no one but you can use your logins.

For my part, I have always considered the RoS as a clause popped in by the HMRC to make IR35 compliancy nigh on impossible, in and of itself. Thank God IR35 is (currently) decided upon by a variety of flavours.

Anyway, to answer the question, No. And I have also never heard of anyone else ever utilising this right.

[northernladuk]

One person has it appears.

https://forums.contractoruk.com/showthread.php?t=41375

There is the assumption the clause is properly written and un fettered which I'll bet many that haven't had a contract check aren't.

[northernladuk]

Good question.

Not only banks but, to be fair, any large blue chip will have complicated onboarding processes with rules dictating that no one but you can use your logins.

What has using log in got to do with anthing?"No company in their right mind would do that. Is that what you think a substitute does?

For my part, I have always considered the RoS as a clause popped in by the HMRC to make IR35 compliancy nigh on impossible, in and of itself. Thank God IR35 is (currently) decided upon by a variety of flavours.

And you'd be wrong yet again. Substitution clauses have been in service contracts for as long as they've been around and are well used, particulary by offshore consultancy companies. Many other industries have and use them. To think they've been put in just for contractors is pretty short sighted at best.

Although it's one of the three pillars it's the minor one of the three. Just having the ability to do it in your contract is enough. Not one IR35 case that HMRC lost has evidence of substitution so the comment about HMRC putting it in to make compliance nigh on impossible is absolute poppycock.

[Cirrus]

I need to think if it's workable.

Why - what are you planning to do?

[SueEllen]

Can anyone who has provided a substitute share their wisdom?

Easiest thing to do is either use someone who works there part-time to do some of your hours, or someone who has just left but didn't get kicked out.

This does involve you having talked to loads of people inside the organisation to find those with similar skills to yourself.

[pr1]

Easiest thing to do is either use someone who works there part-time to do some of your hours, or someone who has just left but didn't get kicked out.

Out of interest how many times have you done this? Were there any issues with the client?

[billybiro]

In these modern IR35 proof contracts we have the rights to provide substitute devs.

The tricky thing is that banks have complex onboarding process for even contractors, so I need to think if it's workable. Eg Disclosures and address checks + a million forms

Can anyone who has provided a substitute share their wisdom?

Virtually no-one as 99% of all substitution clauses in the contracts of IT Contractors are a sham. The most frequently used constraint is that of the client having the final say on the actual substitute used. Therefore, clients can simply reject any/all substitutes offered by the contractor's Ltd. for whatever reasons they desire, thus making the contractor's Ltd. having a "right of substitution" to be a sham since it effectively doesn't exist.

Real substitution clauses allow the contractor's Ltd. to be the final adjudicator on who the actual substitute may be. Of course, the contractor's Ltd. has to ensure that the substitute possesses the relevant skills for which the contractor's Ltd is responsible. However, such "genuine" substitution clauses in the contracts for one-man-band IT Contractors, and irrespective of the sector that the contractor is working in, are as rare as rocking horse sh*t!

[MrButton]

I’ve done it. Not in banking but in the public sector (SC cleared gig) everyone was happy with the arrangement.

Just a bit of legwork to get logins and security signoff. But no more than a couple of hours work.

[rogerthedodger]

What a vast number of contractors do not seem to understand is that in an HMRC investigation, the tax inspector will be looking at what actually happens in practice, and this is much more important than what is in the written contract.

With regards to RoS, the fact of the matter is that you need to have an UNQUALIFIED RIGHT to substitute. This means you have to be able go to your client and say that you WILL be bringing in e.g. Fred Bloggs or Jane Smith to cover for you whilst you are on holiday or working with another client, NOT "is it OK if I bring in Fred Bloggs / Jane Smith". In other words, it's got to be TELL, NOT ASK!

In practice, only a very tiny percentage of one man band contractors would ever pass the substitution test (and quite possibly none at all), for the simple reason that they do not in practice have the unqualified right. This is irrespective of what the written contract says. In particular, any caveats in written contracts such as "request to substitute will not be unreasonably withheld" will automatically result in a fail, because such caveats immediately tell the tax inspector that permission had to be sought in the first place, and therefore there has been no unqualified right. Also, even if you have brought in a subby, that does not automatically mean you're bullet proof. If you've actually brought in a subby, but you've had to ask permission to do so, then it's a fail, because you haven't had the unqualified right. No client in his/her right mind, in practice, will allow a contractor to bring in a subby without prior approval, even if such approval is just a few simple questions

A tax inspector will talk to your clients, and will be trying to find out what happens in practice. Your clients will not want to be seen to be aiding and abetting tax evasion, and will therefore cover their backs by telling the tax inspector the truth, not telling the tax inspector what you want them to tell the tax inspector.

As a contractor, you are in practice engaged by a client because of your skills as an individual, not because Your Company Ltd is a renowned and reputable player in e.g. project managing xyz. That's why you send clients a CV rather than point them to the Your Company Ltd website.

HMRC have upped their game in recent years, and contractors who had passed IR35 years ago would in all probability not pass today.