Contract substitution - Inside or Outside? Contract substitution - Inside or Outside?
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    Default Contract substitution - Inside or Outside?

    Here's the wording in my contract regarding substitution....

    "The consultant shall not be entitled to retain sub-consultants for the performance of its undertakings persuant to the Agreement without written approval or replace personnel without written consent"

    "The consultant shall be responsible for ensuring that its employees and other persons retained by the Consultant to perform the engagement possess the qualifications, authority and reliability required to fulfil the engagement. The client shall be entitled to take the measures that it deems necessary in order to ensure that the relevant persons fulfil such requirements"

    "In the event the client considers that certain personnel or other persons retained by the consultant for the performance of the engagement are deficient as regards the requirements which may be reasonably imposed for the performance of the Engagement, the client shall be entitled to demand a replacement of such personnel or other persons by written notice to the consultant. The replacement shall occur as soon as possible under the circumstances, and no later than 10 business days following the client's demand"


    The contact was arranged without any consideration for IR35, so it genuinely reflects the working agreement and isn't a sham-clause.

    So in the CEST question about substition, can I honestly answer that the client cannot reject a substitute?

  2. #2

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    Quote Originally Posted by Winger300 View Post
    Here's the wording in my contract regarding substitution....

    "The consultant shall not be entitled to retain sub-consultants for the performance of its undertakings persuant to the Agreement without written approval or replace personnel without written consent"

    "The consultant shall be responsible for ensuring that its employees and other persons retained by the Consultant to perform the engagement possess the qualifications, authority and reliability required to fulfil the engagement. The client shall be entitled to take the measures that it deems necessary in order to ensure that the relevant persons fulfil such requirements"

    "In the event the client considers that certain personnel or other persons retained by the consultant for the performance of the engagement are deficient as regards the requirements which may be reasonably imposed for the performance of the Engagement, the client shall be entitled to demand a replacement of such personnel or other persons by written notice to the consultant. The replacement shall occur as soon as possible under the circumstances, and no later than 10 business days following the client's demand"


    The contact was arranged without any consideration for IR35, so it genuinely reflects the working agreement and isn't a sham-clause.

    So in the CEST question about substition, can I honestly answer that the client cannot reject a substitute?
    You have heard IR35 has been delayed for a year? Why on earth would you even bother with a CEST test? Get your contract reviewed professionally if your not penny pinching


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    The client has the right to decline and control the process so yes they can refuse. The first paragraph makes that clear.

    That clause isn't going to pass an IR35 inspection in a million years.
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    That's what I thought.

    In the current climate though I'm reluctant to rock the boat asking for a change in the contract wording.

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    Quote Originally Posted by Winger300 View Post
    That's what I thought.

    In the current climate though I'm reluctant to rock the boat asking for a change in the contract wording.
    So your options are:-

    Assume the contract is inside IR35 and use an umbrella.
    Get a review and see if the agency will change it
    Pray HMRC doesn't come knocking at any point.

    1 and 2 are sane approaches although 2 has some risk.
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    Working Practices will override the written contract. If the Client say "Er, no thanks we don't want him/her" then the clause is meaningless...It will not indicate a true contract of Supply.

    Get the contract reviewed, Professionally, and then have the Working Practices reviewed, too.
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  7. #7

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    Quote Originally Posted by GhostofTarbera View Post
    You have heard IR35 has been delayed for a year? Why on earth would you even bother with a CEST test? Get your contract reviewed professionally if your not penny pinching


    Sent from my iPhone using Contractor UK Forum
    The CEST site has been getting a lot of stick. Nevertheless, HMRC do state they will stand by determinations as long as the information provided can be proven to be accurate. Now that's pretty open I guess. But... I'm hearing that if you're going for paid for assessments, a large and possibly excessive percentage of them are resulting in 'Inside' determinations. I suspect they need to be absolutely 100% rock solid certain if they conclude outside... i.e. ANY doubt whatsoever and they'll push you inside.

    Fact is, meeting the stipulations might not be childsplay, but neither is it astrophysics. A few minor steps can make a big difference.

    The biggest risk in my view is lack of understanding from clients, risk aversion from clients and assessment service providers, and companies gradually moving away from outside IR35. We all need to work together to halt and reverse that trend.

  8. #8

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    Quote Originally Posted by Winger300 View Post
    Here's the wording in my contract regarding substitution....

    "The consultant shall not be entitled to retain sub-consultants for the performance of its undertakings persuant to the Agreement without written approval or replace personnel without written consent"

    "The consultant shall be responsible for ensuring that its employees and other persons retained by the Consultant to perform the engagement possess the qualifications, authority and reliability required to fulfil the engagement. The client shall be entitled to take the measures that it deems necessary in order to ensure that the relevant persons fulfil such requirements"

    "In the event the client considers that certain personnel or other persons retained by the consultant for the performance of the engagement are deficient as regards the requirements which may be reasonably imposed for the performance of the Engagement, the client shall be entitled to demand a replacement of such personnel or other persons by written notice to the consultant. The replacement shall occur as soon as possible under the circumstances, and no later than 10 business days following the client's demand"


    The contact was arranged without any consideration for IR35, so it genuinely reflects the working agreement and isn't a sham-clause.

    So in the CEST question about substition, can I honestly answer that the client cannot reject a substitute?
    I have done a lot of testing in the CEST site to establish the main drivers of the determinations. Probably the wording above is vulnerable. But it is fine for clients to have the right to reject a candidate. I'm also hearing though, that just relying on a substitution clause in your contract, even a robust one, is not enough. You need to ensure your client acknowledges and is aligned with it - the full implications of it. You'll likely also need to be able to demonstrate you have the capability to implement a substitution. There are other measures you can take to defend your position, but the right of substitution seems to be HMRC's primary first shot across the bows. If you have actually had a substitute paid by you, that can apparently push you outside all on its own, so demonstrating the robust capability to do so is going to strengthen your position.

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    Quote Originally Posted by eek View Post
    So your options are:-

    Assume the contract is inside IR35 and use an umbrella.
    Get a review and see if the agency will change it
    Pray HMRC doesn't come knocking at any point.

    1 and 2 are sane approaches although 2 has some risk.
    3. rely on lack of SDC and MOO for a true outside determination.
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    Quote Originally Posted by Lance View Post
    3. rely on lack of SDC and MOO for a true outside determination.
    MOO is a difficult one here. The client maybe doesn't need me working 100%. Legally there's no obligation to give work, but practically if they don't then I'll move to another client.

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