Sub-contracting vs substitution

[Gentile]

I can't believe that HMRC has even got us arguing amongst ourselves about the definition of basic things like Substitution. HMRC's whole approach to IR35 is designed to introduce doubt into fairly unambiguous situations for their own purposes. In relation to contracting, I can't think of anything less ambiguous than engaging a substitute to fulfil some or all of your contractual obligations. Paying someone to do work that comes under your contract, any part of your work, is simply not something that any employee would do or would be allowed to do. It doesn't depend on you letting them do the work how they choose (they might be your employee, in which case D&C would be wholly appropriate), and it doesn't need to be the whole contract they are fulfilling. The point is, engaging any type of substitute with any degree of freedom in how they do the work isn't something that employees do.

[TestMangler]

Tulip, can't believe I'm saying this, but 'Wot Gentile Said'

[speling bee]

Tulip, can't believe I'm saying this, but 'Wot Gentile Said'

So... sub-contracting some work might not just be a good business idea per se, but it may assist in terms of demonstrating a contract outside of IR35.

[TestMangler]

In saying that though, I've done an 'actual' substitution. I also have documentary evidence of someone who was on the same contract as me doing what would be seen as an 'actual' substitution when the contract had an extremely fettered sub clause.

Also, a few of my contracts have been 80% working from home (with a couple at 100%) so I can't agree with the people who say that subbing out when working from home isn't a valid substitution. If i'm not required to attend a client site, why the hell would a substitute be ??

[mudskipper]

I got a photoshop-savvy mate to do a transparent background on an image to use on client's website. I bought him a pint. Perhaps I should get him to invoice me.

[malvolio]

Mal, it was a genuine (and polite) question, as was the OP, so there's no need to be arsey.

RoS clause from MyCo's contract:



So you see I am a little confused when you say:

Well it is confusing. You need to separate "the contract" from "the worker" and You from YourCo. YourCo owns the contract and is responsiible for delivering it. Normally You do the work. A substitute is a replacement You, not a replacement YourCo (that would be novation of contracts, not substitution, and You and YourCo would be out of the loop completely). So for substitution to work, YourCo is still responsible for delivery of the whole contract but the delivery is done by any worker on behalf of your company.

A sub contractor is only responsible for delivery of some part of the contract. It may be a substantial part, of course, but You remain totally responsible throughout.

Another way to look at it is the Subsitute is likely to turn up to meetings and decide what to do, a sub-contractor waits at home until you give them a piece of work to do.

However, legally the RoS is about YourCo's right to send in another You, the person the client actually hired for the job. The exact borderline between substitute and sub-contractor is not all that hard and fast, and probably not all that relevant. I'm not sure it's ever been tested

and:



The B&Q analogy is too subtle for me, sorry.

Difficult to think of decent analogies after a few large G&Ts.

[TestMangler]

I got a photoshop-savvy mate to do a transparent background on an image to use on client's website. I bought him a pint. Perhaps I should get him to invoice me.

This thread seems to bring out the sarcastic side of the knitting jet-set

When I say documentary evidence, I mean the all the emails and written communications that went between all the parties involved, i.e. contractor, substitute, client. What this proves is that, despite the extremely fettered sub clause, which would no doubt be shot down as a 'sham' by the experts of CUK (and HMRC), substitution, under those terms, took place in reality.

Part of the problem with these discussions on CUK is that they take place with no input from anyone who's actually 'done it' and is filled with opinions of people who read up on stuff and become instant experts.

[d000hg]

Sub-contracting is not substitution (or did we already say that?).

There's nothing to stop you sub-contracting part (or even all) of your work. It won't make any difference to an IR35 case though since employees can do the same: after all, your line manager does it all the time...

That's not at all the same. Your line manager is not paying you to do work assigned to him, his job is to plan who does the work from people who are already being payed by the same company.

An employee who paid someone on RentaCoder to do their work would almost certainly get in serious trouble.

I view using subcontractors as "proper business" BUT you face the same problems in that your contract might not allow it without client's permission, and your client might not want it anyway. In which case saying "it's my choice", while potentially true, is meaningless because a client can just terminate you according to their choice.

[centurian]

FFS, this is basics of fereelancing #101.

A subsitute is nominated by you to take over your contract and do your job while you are somewhere else.

Sorry Mal, but I don't think this is right. Being able to assign the rest of the contract to someone else is known as a Right of Transfer or a Right of Assignment.

As far as I am concerned, RoS means being able to send someone else in your place, be it for a day, a week, or the rest of the contract - but you remain ultimately responsible.

[malvolio]

Sorry Mal, but I don't think this is right. Being able to assign the rest of the contract to someone else is known as a Right of Transfer or a Right of Assignment.

As far as I am concerned, RoS means being able to send someone else in your place, be it for a day, a week, or the rest of the contract - but you remain ultimately responsible.

So which bit of

You need to separate "the contract" from "the worker" and You from YourCo. YourCo owns the contract and is responsiible for delivering it. Normally You do the work. A substitute is a replacement You, not a replacement YourCo (that would be novation of contracts, not substitution, and You and YourCo would be out of the loop completely). So for substitution to work, YourCo is still responsible for delivery of the whole contract but the delivery is done by any worker on behalf of your company

.

didn't you understand?