How does one find a substitute? How does one find a substitute?
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    Default How does one find a substitute?

    I am happy to substitute for someone with the same skill set as me, and I am pretty sure others would do the same.

    Some clients want proof that you can actually provide a suitable substitute, before they declare your post April contract outside IR35. Other than people you have worked with before, which may be pretty limited, where do you find your substitute?

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    Quote Originally Posted by zonkkk View Post
    I am happy to substitute for someone with the same skill set as me, and I am pretty sure others would do the same.

    Some clients want proof that you can actually provide a suitable substitute, before they declare your post April contract outside IR35. Other than people you have worked with before, which may be pretty limited, where do you find your substitute?
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    Quote Originally Posted by zonkkk View Post
    I am happy to substitute for someone with the same skill set as me, and I am pretty sure others would do the same.

    Some clients want proof that you can actually provide a suitable substitute, before they declare your post April contract outside IR35. Other than people you have worked with before, which may be pretty limited, where do you find your substitute?
    Do you have evidence of this? . Not sure I've see any. If you sign an agreement to allow substitution then it's your problem not theirs.
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    Quote Originally Posted by northernladuk View Post
    Do you have evidence of this? . Not sure I've see any. If you sign an agreement to allow substitution then it's your problem not theirs.
    Yes my client asked me to provide them with a potential substitute, including their qualifications.
    Apparently, it may be regarded as a strong indication that the substitution agreement is 'practical and plausible'.

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    Quote Originally Posted by zonkkk View Post
    Yes my client asked me to provide them with a potential substitute, including their qualifications.
    Apparently, it may be regarded as a strong indication that the substitution agreement is 'practical and plausible'.
    Yes if that sub is an employee of your company and is available at all times. To ask for a contractor to provide details of a othrt contractor is a waste of time. The chances of that contractor, if they are any good, being on the bench at whatever point you need them to sub is nil. Just an irrelevant paperwork exercise.
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    Quote Originally Posted by zonkkk View Post
    I am happy to substitute for someone with the same skill set as me, and I am pretty sure others would do the same.

    Some clients want proof that you can actually provide a suitable substitute, before they declare your post April contract outside IR35. Other than people you have worked with before, which may be pretty limited, where do you find your substitute?
    As you contract and move between clients, you should be creating a network of contacts; clients, other contractors or good employees at clients (people do move around and can put a good word in).

    Pick one of the other contractors and ask them to agree to substitute. Most of my contacts are happy to do so. Problem is that it's unlikely they will be free and that the different in cost (you earn £500 / day, they charge £500/day) makes it financially risky from a business perspective - but as a paper exercise, the right is there and it's realistic so you've done your bit.

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    Quote Originally Posted by northernladuk View Post
    Yes if that sub is an employee of your company and is available at all times. To ask for a contractor to provide details of a othrt contractor is a waste of time. The chances of that contractor, if they are any good, being on the bench at whatever point you need them to sub is nil. Just an irrelevant paperwork exercise.
    You keep taking this line but it's wrong.

    It was right in the old world when YOU made the determination, and when you might actually want a substitute. In that old world, the problem of actually implementing substitution was important.

    In this new world, only one thing matters -- convincing the client to make an outside determination. Clients are nervous about giving an outside determination, and having 'the right of substitution' be determined by HMRC to be a sham. So in this case, and at least one other we've heard about here, they want to be able to prove that not only have they agreed it in principle, but they've done due diligence of ensuring that the contractor actually can provide a sub. That gives them a much stronger case to say, "It's not a sham." This is almost certainly coming right out of the legal department.

    It's not about his sub actually subbing -- as you've said, practically, this isn't much help for that. It's about them having evidence to cover their backsides that they really are serious about subbing, so serious that they've asked for evidence that he can provide a sub.

    In the old world where we made the determination, it was meaningless. In the new world, it gives clients comfort and some measure of legal protection against the accusation that the sub clause is a sham. "Oh, no, we didn't just stick that clause in there. We wouldn't give that right to someone without ensuring that he could hold up his end of it and provide someone qualified, and ContractorLtd did show that. Here's the proof." HMRC hopefully says, "Ok, let's go find an easier target, these guys knew what they were about."

    When you say it is an irrelevant paperwork exercise, in terms of whether actual subbing takes place, it is. In terms of whether it is beneficial to the legal position of the client, and thus helps them enter into a better B2B mindset and better justify an outside determination, it isn't irrelevant at all. It's probably the first thing they pull out when HMRC comes calling, because it effectively proves that the client is not viewing the substitution clause as a sham, and that kills HMRC's case.

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    Quote Originally Posted by WordIsBond View Post
    You keep taking this line but it's wrong.

    It was right in the old world when YOU made the determination, and when you might actually want a substitute. In that old world, the problem of actually implementing substitution was important.

    In this new world, only one thing matters -- convincing the client to make an outside determination. Clients are nervous about giving an outside determination, and having 'the right of substitution' be determined by HMRC to be a sham. So in this case, and at least one other we've heard about here, they want to be able to prove that not only have they agreed it in principle, but they've done due diligence of ensuring that the contractor actually can provide a sub. That gives them a much stronger case to say, "It's not a sham." This is almost certainly coming right out of the legal department.

    It's not about his sub actually subbing -- as you've said, practically, this isn't much help for that. It's about them having evidence to cover their backsides that they really are serious about subbing, so serious that they've asked for evidence that he can provide a sub.

    In the old world where we made the determination, it was meaningless. In the new world, it gives clients comfort and some measure of legal protection against the accusation that the sub clause is a sham. "Oh, no, we didn't just stick that clause in there. We wouldn't give that right to someone without ensuring that he could hold up his end of it and provide someone qualified, and ContractorLtd did show that. Here's the proof." HMRC hopefully says, "Ok, let's go find an easier target, these guys knew what they were about."

    When you say it is an irrelevant paperwork exercise, in terms of whether actual subbing takes place, it is. In terms of whether it is beneficial to the legal position of the client, and thus helps them enter into a better B2B mindset and better justify an outside determination, it isn't irrelevant at all. It's probably the first thing they pull out when HMRC comes calling, because it effectively proves that the client is not viewing the substitution clause as a sham, and that kills HMRC's case.
    It's not wrong. It's about doing it properly. We are here because we've been putting sticking plasters on, making a paperwork trail and sitting here worrying about it unfolding in court.

    We have a chance to do things properly and this, IMO isn't it. It's another silly paperwork exercise that will fall apart at first glance. OK ok I can't think at this point how this will come under scrutiny and fall apart but we didn't know how we'd get to this point when IR35 started.

    Providing a name of some random contractor when there is, in reality, no way in hell it will ever work is just a waste of time and we carry on with crap paperwork to avoid the reality of the situation. Why do that to ourselves again. I'd be very disappointed if this is all that is needed to convince a client we can sub. Doesn't say much for the diligence applied by the client. So what, it's their risk now I hear you say. Ok fair enough, for now... but what's going to happen down the line? Why not do it properly from the off? You say it kills HMRC case because clients are not viewing it as a sham. It will take 2 seconds of questioning to prove this wasn't a realistic offering and makes it look even more like it's a sham and will warrant a much deeper dive in to other aspects of the engagement.

    If the client isn't convinced then offer some extra lines in the contract around substitution. I've said this for years. Instead of having one sentence in a contract that is arguable a sham and we've no idea what will happen when it gets pulled out in court, why not put some extra clauses in to shore up the agreement around the substitute. Offer x days handover at no cost, contractor will source at their cost and criteria around when it's realistically effective for the two parties to engage with a sub. That shows the client is committed to a sub.

    With extra clauses making a clear and concise substitution agreement that is signed by both parties there can be no argument everyone understands, has discussed the situation and is in agreement. It's there in the contract so can't be ignored, got around or misunderstood. Client is protected by the clauses so will be more likely to honour it and offer an outside gig.

    I worry what the future will be if all outside determinations are based on something that can't happen.

    Yes you might be right, it's all a client needs to give the determination but it just doesn't sit right with me and think its a poor approach, particularly when there is a chance to do it better.
    Last edited by northernladuk; 17th February 2020 at 16:52.
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    Quote Originally Posted by northernladuk View Post
    Yes you might be right, it's all a client needs to give the determination but it just doesn't sit right with me and think its a poor approach, particularly when there is a chance to do it better.
    It's probably not all the client needs to give the determination. It's probably Legal saying, "Get this to cover our backside or we're not going to allow this outside determination."

    I'm guessing you've never worked in management, with Legal coming back on everything you want to do and saying, "Tweak this, get this piece of paper," etc. This is very typically the kind of nonsense that Legal will do.

    HR has looked at it, perhaps Dept Manager has looked at it, they've run it through CEST or QDOS or someone similar, they've said, "We can't do outside unless you'll accept a sub." Dept Manager has said, "I don't want to lose this guy, I'll accept it as long as the sub is good. He'll probably never sub anyway, he likes it here. Say we'll accept a qualified sub." So it's gone through to Legal and they say, "Tick the boxes, we don't want HMRC to say the sub is a sham."

    This is exactly the way things work in corporate mgmt. It just is.

    If it all goes pear-shaped as you say, who cares? The liability is the client's. You've made yourself very knowledgeable on the old rules, so you think clients should brush up on the old rules and get them right. You're wrong. There's only one rule that matters now -- if a client is willing to give an outside determination, give them every piece of paper and any contractual clause that makes them comfortable with it. That's it.

    There's a very high likelihood the contract clauses are absolutely fine, and this is simply Legal doing what Legal does.

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    Quote Originally Posted by WordIsBond View Post
    It's probably not all the client needs to give the determination. It's probably Legal saying, "Get this to cover our backside or we're not going to allow this outside determination."

    I'm guessing you've never worked in management, with Legal coming back on everything you want to do and saying, "Tweak this, get this piece of paper," etc. This is very typically the kind of nonsense that Legal will do.

    HR has looked at it, perhaps Dept Manager has looked at it, they've run it through CEST or QDOS or someone similar, they've said, "We can't do outside unless you'll accept a sub." Dept Manager has said, "I don't want to lose this guy, I'll accept it as long as the sub is good. He'll probably never sub anyway, he likes it here. Say we'll accept a qualified sub." So it's gone through to Legal and they say, "Tick the boxes, we don't want HMRC to say the sub is a sham."

    This is exactly the way things work in corporate mgmt. It just is.

    If it all goes pear-shaped as you say, who cares? The liability is the client's. You've made yourself very knowledgeable on the old rules, so you think clients should brush up on the old rules and get them right. You're wrong. There's only one rule that matters now -- if a client is willing to give an outside determination, give them every piece of paper and any contractual clause that makes them comfortable with it. That's it.

    There's a very high likelihood the contract clauses are absolutely fine, and this is simply Legal doing what Legal does.
    I find all that a tad difficult to swallow and very shabby even if you are absolutely spot on. Lot of probably's in there.I'd argue it's the clients with no decent legal department that believe this evidence is worth the paper it's written on.

    But... we will have to agree to disagree. I am not going to change your mind as you are probably right it's all that's needed, and you'll not change my mind that it's a sham with the possibility of unravelling in the future so do it a better way. Is this a good way to demonstrate the ability to substitute, absolutely not. Is it all that is needed to get an outside determination, probably.

    We started off paying less than lipservice to IR35 until the investigations started and we've been playing catch up for years. What's next? HMRC investigating determinations? And you are absolutely sure none of it will come back on us. I'll have to bookmark this post for when the first determination investigations happen and it ends up with the contractor regardless of regs as I think that is what will happen at some point. Could be many years off I admit.

    But enough of my pedantry. Go ahead and provide some random bods name if it works.
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