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Substitution and IR35

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    #11
    Originally posted by jamesbrown View Post

    Third, work out what sort of relationship you want between the three parties. Subcontracting is more flexible and, in that case, the client may have no idea that it is even happening (again, the contract will probably regulate what happens, such as "no assigning or subcontracting without prior approval"). If you both want a bum-on-seat representative of YourCo working on the client site, then that is substitution (assuming they are doing work that you would otherwise do)..
    But it's not. It's extra work the OP can't do.
    'CUK forum personality of 2011 - Winner - Yes really!!!!

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      #12
      Originally posted by northernladuk View Post
      Couple of thoughts here. For a start, you aren't sending someone else, you are sending an additional resource. You can't do it so it's not someone else. Maybe that's where you are tripping yourself up.

      So now we have nearly finished defining the meaning of the two words.. Of course you need a contract with your sub. They work for you. Would you work at your client with no contract? Clue is in the name of what we are. You'll also need something from the client to agree the extra costs and scope of the work.
      How you work with your sub is up to you but you represent them to the client and you are responsible ultimately but up to you how diligent you are.

      Have you thought how you are going to do all this? Have you got the time and the means to go try find a contractor and get all the legal documents and contracts together to get them on board? Are you going to be able to find one that can only work for the time you need? If it's only a couple of weeks it's a lot of work for little back. If it is a short gig I'm not surprised the client can't be bothered resourcing it and happy to palm it to you. Could be a right pain. Unless there is a pretty good financial outcome for you here it could be a lot more effort than it is worth. Have you run the numbers to see what you'll be getting out of it?

      Another thing. Client giving you extra work above and beyond the Statement of Work you are already contracted to do (You do have one of those don't you) sounds very much like Direction and Control to me. You need to be careful your working practices are IR35 safe. This does give you an opportunity for some good IR35 defense as you are working like a business but if could uncover other situations where you are just being given work like a permie. In this instance you can subcontract, great, but are there other instances where you've just accepted other work? Just be wary.
      Yes I’ve found the sub and yes I’ve time to sort the documentation.
      Yes I have agreement from client re additional costs and yes I’ve run the numbers.

      Yes I have a SoW with the client, of course. I was always free to decline the additional work as out of scope. I am no way subjected to SDC. I do not just accept ‘work’ from the client. In this instance I was asked could I do it and if not could I sort someone else to do it.

      Comment


        #13
        Originally posted by jamesbrown View Post
        First, I would forget about IR35. That is the tail wagging the dog.

        Second, I would look at your contract with the client. It may have separate clauses on subcontracting and substitution. It may be silent about one or both. Then there's the reality of whether the client will stick to the contractual terms or has room to interpret them differently. For example, with a Right of Substitution, that right could be fettered in some way that makes it difficulty to achieve in practice (e.g. "client reserves the right to reject a sub because they smell").

        Third, work out what sort of relationship you want between the three parties. Subcontracting is more flexible and, in that case, the client may have no idea that it is even happening (again, the contract will probably regulate what happens, such as "no assigning or subcontracting without prior approval"). If you both want a bum-on-seat representative of YourCo working on the client site, then that is substitution (assuming they are doing work that you would otherwise do).

        As I say, forget about IR35. Your question is a question about what makes sense from a business POV.

        Just make sure that you stick to the contract with your client and that you don't lose money (and/or face).
        Thanks for this. I’m not worried re IR35.

        My contract with the client has a substitute clause but is silent on subcontracting. I think your point about the relationship of the three parties is important and what I’ll focus on.

        Comment


          #14
          Originally posted by AdeleLaptop View Post
          Yes I’ve found the sub and yes I’ve time to sort the documentation.
          Yes I have agreement from client re additional costs and yes I’ve run the numbers.

          Yes I have a SoW with the client, of course. I was always free to decline the additional work as out of scope. I am no way subjected to SDC. I do not just accept ‘work’ from the client. In this instance I was asked could I do it and if not could I sort someone else to do it.
          Sounds like you are in a good place then. If your relationship is so good with the client is there any opportunity to change your whole engagement with the client from a T&M contractor style to a more managed service and proactively chase work?

          If you can get this extra resource in you are already most of the way there, just maybe change the clients view with them and start to look at the future portfolio to ring fence future work rather than them asking you to do this and that. Move to an over arching contract and bill per piece of work? You take on a client relationship/sales hat as well as a contractor on the ground?

          Or are you already there with the client coming to you to resource more work?
          'CUK forum personality of 2011 - Winner - Yes really!!!!

          Comment


            #15
            Originally posted by northernladuk View Post
            But it's not. It's extra work the OP can't do.
            If you're suggesting that the reason for the OP sending a substitute matters w/r to whether it qualifies as "substitution", then it doesn't. It's sufficient that the OP is qualified to do the work and would do the work, but simply decides they won't do the work for whatever reason and instead sends another representative of TheirCo. There is no question of cause w/r to what qualifies as a substitution (i.e., can't be arsed, ill in hospital, too much other work, maternity or paternity, whatever), only that the OP would have done the work otherwise (e.g. if the OP was a brazilian percent more productive). As an aside, the whole concept of substitution is completely alien in normal B2B contracts; substitution is really a UK IR35 thing (the more general parallel is the idea of "key people" working a contract and whose movement requires client approval).

            Comment


              #16
              Originally posted by northernladuk View Post
              Sounds like you are in a good place then. If your relationship is so good with the client is there any opportunity to change your whole engagement with the client from a T&M contractor style to a more managed service and proactively chase work?

              If you can get this extra resource in you are already most of the way there, just maybe change the clients view with them and start to look at the future portfolio to ring fence future work rather than them asking you to do this and that. Move to an over arching contract and bill per piece of work? You take on a client relationship/sales hat as well as a contractor on the ground?

              Or are you already there with the client coming to you to resource more work?
              First time client has done this. You make some great points I’m going to give plenty of thought to. Thanks!

              Comment


                #17
                Originally posted by AdeleLaptop View Post
                First time client has done this. You make some great points I’m going to give plenty of thought to. Thanks!
                First time he has done this.

                Comment


                  #18
                  Originally posted by northernladyuk View Post
                  First time he has done this.
                  Even a broken clock is right twice a day

                  Comment


                    #19
                    Originally posted by ladymuck View Post
                    Even a broken clock is right twice a day


                    'CUK forum personality of 2011 - Winner - Yes really!!!!

                    Comment


                      #20
                      Originally posted by ladymuck View Post
                      Even a broken clock is right twice a day
                      Not if it's a 24-hour clock - then it's only once - and if it's got a date then only once a year

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