Interesting article - Substitution

[northernladuk]

Hearsay, but I have a colleague who was IR35 investigated. During his contract, he was asked to do something that he wasn't particularly knowledgeable about and so he decided to sub-contract the work to another company that were better placed to do the work than him. It was, he says, very favorable to his case (which he won).

I would need to see a lot more detail on this before taking this piece of information on. 'Mates' advice doesn't seem to count for much from what people have said on here. The fact the customer has 'asked him to do something' rather worries me. I can see subcontracting might have been favourable but one would have made a difference either way? Sorry, just needs more than this to mean anything.

[speling bee]

Sorry

If it's off-site and fixed price then why the hell don't you. If it is a case they want you on site then unless you set yourself up as a consultancy it is unlikely.

I go on-site when I need to meet with people and work from my home office when I don't. I'm thinking I can bill two clients for the same day by subbing out. Never really struck me before but I should think about it simply as sound business practice. Of course, I am also interested in whether it will put me outside IR35.

[psychocandy]

What are you not understanding about SUBSTITUTION.... to let someone else do you job... not take bits of work.

You are not substituting.. You are subcontracting the work. It is your job but you are letting someone else do it for you... not instead of you. Your sub has to take your place in the contract with the client... instead of talking to you they talk to your sub. Talking THROUGH you is subcontracting..

Seriously.. you can't substitute yourself without getting client approval. It just doesn't make sense. You can subcontract with him knowing but you can't swap yourself out for someone else without him knowing.

Not getting that, how about this... Permies can take pieces of work away and let someone else do it.

Gotta do better than this fella.

I see what your saying about the differences between subcontracting and substitution.

BUT, OK, I plan to work at home for 3 days. One of these days, I decide not to work but to SUBSTITUTE someone else to do the work that I was going to do on that day. So said person does exactly what I would have done. Admitedly, it may not be at the client site but is this relevant?

Otherwise, are we saying Sub is ony relevant if he replaces main worker at client site for x period of time. If so, surely this having to be there for x hours is a bit contrary to IR35 anyway?

[psychocandy]

I go on-site when I need to meet with people and work from my home office when I don't. I'm thinking I can bill two clients for the same day by subbing out. Never really struck me before but I should think about it simply as sound business practice. Of course, I am also interested in whether it will put me outside IR35.

EXACTLY. If your not on actual client site, why cant said subbie be doing the work on your behalf at his own place of choice? Surely a subbie is a subbie and doesnt physically need to be at your clients office?

[northernladuk]

I see what your saying about the differences between subcontracting and substitution.

BUT, OK, I plan to work at home for 3 days. One of these days, I decide not to work but to SUBSTITUTE someone else to do the work that I was going to do on that day. So said person does exactly what I would have done. Admitedly, it may not be at the client site but is this relevant?

Otherwise, are we saying Sub is ony relevant if he replaces main worker at client site for x period of time. If so, surely this having to be there for x hours is a bit contrary to IR35 anyway?

Oddly enough Roger Sinclair of contractor legal specialist Egos in the other thread seems to agree with you but I just don't buy it.

For a start your contract says at client approval. Try getting a client to agree to let you get an unknown person to sub on a piece of work that is probably to do with their confidential information.

I don't see how getting a sub in that doesn't meet contractual tems can stand up for a start.

All that said he knows better than me so maybe from a legal stand point it would stand but that doesn't mean it makes any sense. Interesting stuff.

[Lewis]

The fact the customer has 'asked him to do something' rather worries me.

I am just baffled by that statement but anyhow, he had PCG Plus and was defended by Abbey Tax and won. He tells me that the fact he sub-contracted a tiny part of the work he was billing for was beneficial to his case. But absolutely do your own research and make your own decision, that's why I qualified the statement with "hearsay"!

[northernladuk]

EXACTLY. If your not on actual client site, why cant said subbie be doing the work on your behalf at his own place of choice? Surely a subbie is a subbie and doesnt physically need to be at your clients office?

Speling Bee is talking about subcontracing not substituting, just using the wrong word (subbie) which is confusing things. So not exactly I am afraid.

[psychocandy]

Oddly enough Roger Sinclair of contractor legal specialist Egos in the other thread seems to agree with you but I just don't buy it.

For a start your contract says at client approval. Try getting a client to agree to let you get an unknown person to sub on a piece of work that is probably to do with their confidential information.

I don't see how getting a sub in that doesn't meet contractual tems can stand up for a start.

All that said he knows better than me so maybe from a legal stand point it would stand but that doesn't mean it makes any sense. Interesting stuff.

Yes, of course the contractual terms would cause an issue maybe.

Probably not so clever to just go ahead and do it, pay someone else and not even tell the client. Might be null and void because you didnt follow procedure.

[MyUserName]

Surely this substitute thing is easy to understand?

If you were IBM or someone then you would be hired to provide a consultant with the required skillset. Normally you would not have to provide a specific person (it does happen but it is rare), you can provide person X and switch them with person Y, as long as the quality is the same the customer will probably not mind.

The principle is the same for any consultancy company, it helps prove to HMRC that you are a proper one if you are also able to do this otherwise your company arrangement is an unusual one and you will probably have some explaining to do.

Have I missed the point here? I cannot see why there is confusion over it.

[northernladuk]

Surely this substitute thing is easy to understand?

If you were IBM or someone then you would be hired to provide a consultant with the required skillset. Normally you would not have to provide a specific person (it does happen but it is rare), you can provide person X and switch them with person Y, as long as the quality is the same the customer will probably not mind.

The principle is the same for any consultancy company, it helps prove to HMRC that you are a proper one if you are also able to do this otherwise your company arrangement is an unusual one and you will probably have some explaining to do.

Have I missed the point here? I cannot see why there is confusion over it.

My thoughts exactly but have a look at the second link from NotAScooby in this thread...

http://forums.contractoruk.com/busin...stitution.html

Still don't believe that though.