Fake substitution?

[slogger]

Hi
I left a psc role a couple of weeks ago after concerns over the impending tax changes.
I've been asked to go back and substitute for people still working there to assist in showing they're outside ir35.

Normally I thought substitution was a silver bullet that would show you're outside of ir35..however this feels very contrived..could it be an issue for me if hmrc see what's happening and decide it's a sham ?

[northernladuk]

I don't want to be rude but really? Could it be an issue if it's a sham?

Why are you even considering this let alone posting about it? Walk away IMO

[slogger]

I don't want to be rude but really? Could it be an issue if it's a sham?

Why are you even considering this let alone posting about it?

Obviously for them yes, I meant from my perspective as the substitute what if any problems could occur?

Also the only reason I'm worried it could be seen as a sham is its only being done because of new tax policy..I can in reality be an ideal sub for them..

[Lance]

In the public sector world after April it makes no odds if RoS has been proven. The only factor that determines IR35 status is the opinion of the client (until tested in law anyway).

[RonBW]

If the contractor wants to bring in a substitute for their work, they are (presumably it's in the contract) allowed to do that.

I'm not sure that HMRC could argue that it's a sham arrangement if they are allowed to bring in a substitute and they do that. Keep a record of the work that you do so that everyone has a record that you are genuinely doing work rather than just doing nothing, though.

[slogger]

In the public sector world after April it makes no odds if RoS has been proven. The only factor that determines IR35 status is the opinion of the client (until tested in law anyway).

I think their idea is to present to client prior to April all the reasons why they're outside of ir35..they have qdos reviews to say it and are just trying to add more `evidence`

[WordIsBond]

Who is asking you, the client or the contractors? (edit: I see you've answered this)

If the client is asking you to do that, and HMRC finds out about it, they could decide it is a sham, but it is going to be painful for the client.

If the contractors are asking you to do it, it isn't a sham. They've found someone who can substitute for them that the client will accept. A guy decides to take a week off and gets a substitute in. He contacts you, you sign a contract with him, he pays you, how is that a sham?

The only thing that is a sham in that case is IR35 itself. It's making people behave in ways they wouldn't ordinarily behave, maybe.

But in any event, the people carrying out any sham will be the contractors or the client. You are just doing work that someone contacted you to do. It isn't your job to divine what their intent is or to do HMRC's job for them. No one can blame you for taking a one week contract to sub in for somebody going on holiday. And it would be pretty hard to make the case, if you are doing that, that either they or you are under IR35.

If HMRC investigates, and they don't like what is happening, they might decide to investigate your past contracts. If they should have been IR35 and you didn't operate it, you might be at risk then. But they probably won't ever investigate the situation.

This is going to be a situation where the client uses the ESS tool, says there is a right of substitution, and so passes the contractors as being outside IR35. Obviously the client is willing to work with the contractors to keep them outside. In that case, HMRC is going to be looking for other targets. It's going to be expensive and gain little for them to try and fight it when both the contractor and the client say it is outside and the tool agreed.

I'd be looking for another regular contract. But in the interim, I don't see any risk to substituting in occasionally for contractors. I'd make them pay a premium, though. You are helping them out, a lot, without any locked in regular contract. It's at a price for you, risking having a lot of down time. And it is saving them a lot of money on taxes. I'd be looking for at least a 10% premium for that kind of short term work.

[slogger]

Who is asking you, the client or the contractors? (edit: I see you've answered this)

If the client is asking you to do that, and HMRC finds out about it, they could decide it is a sham, but it is going to be painful for the client.

If the contractors are asking you to do it, it isn't a sham. They've found someone who can substitute for them that the client will accept. A guy decides to take a week off and gets a substitute in. He contacts you, you sign a contract with him, he pays you, how is that a sham?

The only thing that is a sham in that case is IR35 itself. It's making people behave in ways they wouldn't ordinarily behave, maybe.

But in any event, the people carrying out any sham will be the contractors or the client. You are just doing work that someone contacted you to do. It isn't your job to divine what their intent is or to do HMRC's job for them. No one can blame you for taking a one week contract to sub in for somebody going on holiday. And it would be pretty hard to make the case, if you are doing that, that either they or you are under IR35.

If HMRC investigates, and they don't like what is happening, they might decide to investigate your past contracts. If they should have been IR35 and you didn't operate it, you might be at risk then. But they probably won't ever investigate the situation.

This is going to be a situation where the client uses the ESS tool, says there is a right of substitution, and so passes the contractors as being outside IR35. Obviously the client is willing to work with the contractors to keep them outside. In that case, HMRC is going to be looking for other targets. It's going to be expensive and gain little for them to try and fight it when both the contractor and the client say it is outside and the tool agreed.

I'd be looking for another regular contract. But in the interim, I don't see any risk to substituting in occasionally for contractors. I'd make them pay a premium, though. You are helping them out, a lot, without any locked in regular contract. It's at a price for you, risking having a lot of down time. And it is saving them a lot of money on taxes. I'd be looking for at least a 10% premium for that kind of short term work.

Cheers..good reasoning.
I'm currently in contract elsewhere so would just have to take a few days off here and there

[cojak]

So they get you in and the PS client will tell YOU that you're inside IR35 - what the contractors are doing is throwing you under the bus and hope that they can slip away into the shadows without the retrospective angle hanging over them.

Smart thinking on their part...

[slogger]

Who is asking you, the client or the contractors? (edit: I see you've answered this)

If the client is asking you to do that, and HMRC finds out about it, they could decide it is a sham, but it is going to be painful for the client.

If the contractors are asking you to do it, it isn't a sham. They've found someone who can substitute for them that the client will accept. A guy decides to take a week off and gets a substitute in. He contacts you, you sign a contract with him, he pays you, how is that a sham?

The only thing that is a sham in that case is IR35 itself. It's making people behave in ways they wouldn't ordinarily behave, maybe.

But in any event, the people carrying out any sham will be the contractors or the client. You are just doing work that someone contacted you to do. It isn't your job to divine what their intent is or to do HMRC's job for them. No one can blame you for taking a one week contract to sub in for somebody going on holiday. And it would be pretty hard to make the case, if you are doing that, that either they or you are under IR35.

If HMRC investigates, and they don't like what is happening, they might decide to investigate your past contracts. If they should have been IR35 and you didn't operate it, you might be at risk then. But they probably won't ever investigate the situation.

This is going to be a situation where the client uses the ESS tool, says there is a right of substitution, and so passes the contractors as being outside IR35. Obviously the client is willing to work with the contractors to keep them outside. In that case, HMRC is going to be looking for other targets. It's going to be expensive and gain little for them to try and fight it when both the contractor and the client say it is outside and the tool agreed.

I'd be looking for another regular contract. But in the interim, I don't see any risk to substituting in occasionally for contractors. I'd make them pay a premium, though. You are helping them out, a lot, without any locked in regular contract. It's at a price for you, risking having a lot of down time. And it is saving them a lot of money on taxes. I'd be looking for at least a 10% premium for that kind of short term work.

So they get you in and the PS client will tell YOU that you're inside IR35 - what the contractors are doing is throwing you under the bus and hope that they can slip away into the shadows without the retrospective angle hanging over them.

Smart thinking on their part...

For one or two days that I have to take off anyway and also at a premium to my current rate then me being caught by ir35 shouldn't be an issue surely? Also will only be done prior to april