IR35 review question

[Sidekick]

Some good advice in here, thanks.

Eg. a substitution clause, unless you actually use it (and I would be interested to hear of someone actually invoking it) , it'll be something that's purely in your contract but quite important.
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Depends on the wording and your agreement with your end client. Our clients subcontract and I'm happy to see if one of them would do a little write up for you. I would be careful of thinking of a substitution clause as just a line in your contract - there have been IR35 appeals in the past where the clause was deemed window dressing. IT contractors warned on IR35 substitution clauses :: Contractor UK

[northernladuk]

I've looked at the confirmation of arrangements doc, but as a software developer I'm not sure I'd be able to comply with many of the clauses. I find it hard to believe that many employers would agree to a substitution clause, subcontracting clause, letting them work from home, or letting them use their own equipment, but I am a noob so what do I know I just wonder if that document would do more harm than good in some cases.

So you are inside IR35 then. That letter confirms the points that put you outside on the contract will be allowed as working practices i.e. from the horses mouth that what is agreed in an IR35.

[NibblyPig]

Depends on the wording and your agreement with your end client. Our clients subcontract and I'm happy to see if one of them would do a little write up for you. I would be careful of thinking of a substitution clause as just a line in your contract - there have been IR35 appeals in the past where the clause was deemed window dressing. IT contractors warned on IR35 substitution clauses :: Contractor UK

Ah, that seems to be regarding having an agency. I'm curious to know exactly why they say the clause is a sham, the article doesn't quite mention it. Is it perhaps because the Agency is incapable or unwilling to permit the contractor to substitute thus rendering the substitution clause invalid? It hints at something to do with the nature of the clause but I'm not quite sure.

I haven't looked into substitution clauses enough though, realistically I can't substitute myself for someone else, because I'm just a one man band and I'd not have the first idea how to find someone if I woke up with the flu in such short notice, or the legal implications of sorting that all out. And I'm not sure if simply having the option to substitute yourself and never being able to exercise it carries any weight in the whole IR35 scheme of things.

[malvolio]

Ah, that seems to be regarding having an agency. I'm curious to know exactly why they say the clause is a sham, the article doesn't quite mention it.

In one case (Dragonfly), the Human Remains drone they brought in to answer questions was adamant that the company would not allow a substitute to be said, so contradicting the contract between them and the agency and between the agency and the worker and ignoring the minor detail that the HR guy was entirely ignorant of what had been agreed with the worker. The judge allowed that clear breach of contract law to pass unchallenged. Go figure...

While Dragonfly was a bit of an anomaly, it did establish that contract and reality have to be fully aligned. If they aren't reality wins, every time. What that now means is that the reality is examined and the contract only used to clarify any apparent ambiguities.

Sadly, nobody told the agencies...

[LisaContractorUmbrella]

Ah, that seems to be regarding having an agency. I'm curious to know exactly why they say the clause is a sham, the article doesn't quite mention it. Is it perhaps because the Agency is incapable or unwilling to permit the contractor to substitute thus rendering the substitution clause invalid? It hints at something to do with the nature of the clause but I'm not quite sure.

I haven't looked into substitution clauses enough though, realistically I can't substitute myself for someone else, because I'm just a one man band and I'd not have the first idea how to find someone if I woke up with the flu in such short notice, or the legal implications of sorting that all out. And I'm not sure if simply having the option to substitute yourself and never being able to exercise it carries any weight in the whole IR35 scheme of things.

For a Right of Substitution clause to be valid, your replacement would have to be accepted by agency and client and you would be responsible for paying them - if there is not that freedom but you could still send in a replacement it's referred to as a 'fettered' right of substitution which carries less weight in an IR35 case. If you have a clause in your contract but, in reality, you would not be allowed to send in a substitute or you don't know anyone who could replace you then it will count against you in an IR35 investigation

[NibblyPig]

it did establish that contract and reality have to be fully aligned. If they aren't reality wins, every time. What that now means is that the reality is examined and the contract only used to clarify any apparent ambiguities.

Very interesting. Thanks. Seems to weaken the concept of contracts though! If the contract says you'll pay £300/day but in reality you decide actually nah I'm not going to pay anything, you'd never expect reality to win...!

[LisaContractorUmbrella]

Very interesting. Thanks. Seems to weaken the concept of contracts though! If the contract says you'll pay £300/day but in reality you decide actually nah I'm not going to pay anything, you'd never expect reality to win...!

You're missing the point a bit here. IR35 was introduced to stop 'disguised employees' from reaping the financial benefits offered by drawing dividends from a Ltd Co. - it always was about working practises. Unfortunately, when the legislation was originally published people realised that they could put themselves 'outside' of the legislation by having a contract written that included specific indicators and this did fool HMR&C for a while (they're very slow) as they would only check the contract, assuming that it was an accurate representation of reality. Once they realised this wasn't the case they started more in depth investigations which involved visiting contractors' clients to establish whether or not the way they had been working was as stated in the agency contract.

[Andrew@Wisteria]

The main question I have though is, assuming you get your contract reviewed, what then? I haven't got a contract yet, but assuming I do, they'll give me it and say 'please sign this'. At that point I could go and get it reviewed I assume, but if it comes back as inside IR35, what do I do? Realistically, are they likely to let me change it, or will the people that are reviewing it rewrite it as part of the review? Or does having it reviewed/change absolve me of liability if I get in trouble for it later on?

Thanks for any advice

As previously stated by other posters - changing the contract makes no difference if the working practises do not reflect that stated within it.

In regards to changing the contract - most agencies are very reluctant to change their contracts.

[NibblyPig]

As previously stated by other posters - changing the contract makes no difference if the working practises do not reflect that stated within it.

In regards to changing the contract - most agencies are very reluctant to change their contracts.

Why bother getting it reviewed if they're not going to change it?

[northernladuk]

Why bother getting it reviewed if they're not going to change it?

Some do, some don't. You need to get it reviewed for your own peace of mind and to know how to run your finances i.e. PAYE or divis.

Trying to get it changed and do the right thing is correct. Doing f' all isn't.