It seems that the right to substitution should lead to an automatic "outside" IR35 determination according to the relevant law:
S61M(1)(a)
Sections 61N to 61R apply where—
(a) an individual (“the worker”) personally performs, or is under
an obligation personally to perform, services for another
person (“the client”),
This is not new law and is why the substitution clause has been so vital in determining IR35 status. Most PSC company contracts allow for substitution of workers (or they should do if you have been claiming to work outside IR35 to date). However, it seems HMRC conveniently ignore substitution where it suits them in their new guidance. I would very much like to see the ESS tool questions on substitution. I recall seeing a workflow example where HMRC claimed that a temporary secretary could not "practically" substitute even if her contract allowed and they went on to ignore it completely and moved onto other tests! Can anyone link me to this example as I have saved so many links but cannot find that particular one?
Creasy case is also relevant here: Creasey case confirms the value of an unfettered right to substitute :: Contractor UK
S61M(1)(a)
Sections 61N to 61R apply where—
(a) an individual (“the worker”) personally performs, or is under
an obligation personally to perform, services for another
person (“the client”),
This is not new law and is why the substitution clause has been so vital in determining IR35 status. Most PSC company contracts allow for substitution of workers (or they should do if you have been claiming to work outside IR35 to date). However, it seems HMRC conveniently ignore substitution where it suits them in their new guidance. I would very much like to see the ESS tool questions on substitution. I recall seeing a workflow example where HMRC claimed that a temporary secretary could not "practically" substitute even if her contract allowed and they went on to ignore it completely and moved onto other tests! Can anyone link me to this example as I have saved so many links but cannot find that particular one?
Creasy case is also relevant here: Creasey case confirms the value of an unfettered right to substitute :: Contractor UK
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