Does one substitution protect me from IR35?

[Jake the peg]

I have a substitution clause in my contract but I understand that HMRC don't always consider these realistic.

If I arrange for one of my colleagues to carry out some work for me after agreement from the client, and if I pay him through my company, is that a cast iron protection from being within IR35?

Many thanks

[Craig@Clarity]

If you do provide a substitute in reality, then you're outside IR35 on the basis you've proven that there is no requirement for your personal service.

[cojak]

Is there a business requirement for the substitution? Do you have another contract you need to work on?

Or are you bringing someone in purely so that you can tick the IR35 box?

(the same goes for renting office space, having a website etc.)

[TestMangler]

I have a substitution clause in my contract but I understand that HMRC don't always consider these realistic.

If I arrange for one of my colleagues to carry out some work for me after agreement from the client, and if I pay him through my company, is that a cast iron protection from being within IR35?

Many thanks

Remember that you have to invoice via the company/client/agency structure that you currently use and have your sub invoice your co.

I did it once about seven years ago using a sub clause in a Hays contract which IR35 reviewers had tagged as being 'too restrictive to be considered genuine'.

[tractor]

...

If you do provide a substitute in reality, then you're outside IR35 on the basis you've proven that there is no requirement for your personal service.

But remember that IR35 is considered on a contract by contract basis, so even if you were to put yourself unassailably outside for this contract, you might not be for the next or for previous contracts.

Yes, I know what the new 'test' etc say in that if you pass they won't bother you for three years etc but those are not the law. They are an operating policy that may stand the test of time or they may do a u turn on them even before they are fully implemented. You never can tell.

[Craig@Clarity]

But remember that IR35 is considered on a contract by contract basis, so even if you were to put yourself unassailably outside for this contract, you might not be for the next or for previous contracts.

Agreed. Goes without saying (hopefully)

[northernladuk]

Did you get your contract reviewed by the likes of QDOS as well? There are a couple of points to be careful with around subs, particularly the amount of choice the client has to decline your sub.

[TestMangler]

Did you get your contract reviewed by the likes of QDOS as well? There are a couple of points to be careful with around subs, particularly the amount of choice the client has to decline your sub.

As I mentioned above, The Hays contract I used had a completely fettered sub clause (written agreement of agency and client etc etc) and was normally flagged at IR35 review as being too restrictive to be genuine, but I still subbed against it, so the 'experts' can spout opinion all day long. If the OP uses a sub, regardless of how restrictive the sub clause is, then he's won the 'personal service' arguement for that contract.

[tractor]

...

Did you get your contract reviewed by the likes of QDOS as well? There are a couple of points to be careful with around subs, particularly the amount of choice the client has to decline your sub.

WNLUKS plus the fact that the 'upper' contract (the agency/client) has to mirror the contract you have with the agency i.e that the subsitution clause exists and does not place additional constraints upon any approvals.

[BlasterBates]

In my view if you have used a substitute then any inspector aint going to dwell on your case. Theoretically there is no 100% protection against IR35, but using a substitute is as good as it gets.