Sub-contracting vs substitution

[d000hg]

In my case, I've agreed to find someone to do a specific sub-set of the dev work since

a)I don't really have the time to do everything
b)it's not my main skillset

As long as it gets done and they don't get messed about they're happy.

[northernladuk]

"Have you hired anyone in the last 24 months to do the work you have taken on? You could do this by sending someone to do the work in your place. You could also do this by sub-contracting."

If you answer "Yes" then you score 20 points and so long as you aren't a Friday to Monday disguised permie, you have scored yourself as low risk. The inspector thanks you for your time, gives you a letter saying that you have been assessed as low risk and tells you that you won't be investigated again for 3 years (provided your circumstances don't change).

If you get caught lying then you will pay the tax plus interest and penalties for attempting to conceal your tax evasion.

I completely understand your conservative approach to things like this especially when it comes to noobs bumbling their way through things. Hey, it sounds too good to be true doesn't it. Could it be HMRC have shot themselves in the foot by giving away a silver bullet like this? Maybe Mal just wanted everyone to shut up about it and not let the cat out of the bag so HMRC don't cop on and change the rules yet again?

It most certainly does, as did renting an office with some colleagues but it is also clear that won't wash, nor will subcontracing out £100 of proof reading.

Either way, the tests are pretty clear...

Nothing is clear with HMRC even if it is written in black and white.

If you are running the sort of company that subs out work then you are a genuine business, not a disguised employee and that's what they were trying to tell us all along. Small businesses are good for the economy and the government wants to encourage us business people by allowing tax breaks.

That is true. If you are a one man limited subcontracting work out to pass business tests is wholly different and is just as false as the office example. There is no golden bullet here as we do not do this in general.

It's as simple as that, stop worrying and get on with running and growing your business.

Probably the best advice so far but I just like discussing stuff like this, passes time of day and can be very interesting. Not trying to fix it, just play devils advocate as always. I don't think something is right here but if it says 'even subcontract' they yes, relax and breath......

[northernladuk]

In my case, I've agreed to find someone to do a specific sub-set of the dev work since

a)I don't really have the time to do everything
b)it's not my main skillset

As long as it gets done and they don't get messed about they're happy.

Happy days then. Out of interest I presume the agreement is between you and client?

[Notascooby]

So what would a company need to show this piece of work?

An invoice and payment from your business account I presume.
What is the minimum stipulation for the provider of the service, do they need to be registered with companies house etc - what due dilliegence am I expected to carry out?

Can I use a marketplace such as Terms and Conditions - People Per Hour (PPH) - PeoplePerHour.com and if so what's there (except obviously it is fraudulent) to stop me having a friend set themselves up as the supplier and taking the commision hit as a small price for 20 points?

[northernladuk]

So what would a company need to show this piece of work?

An invoice and payment from your business account I presume.
What is the minimum stipulation for the provider of the service, do they need to be registered with companies house etc - what due dilliegence am I expected to carry out?

Can I use a marketplace such as Terms and Conditions - People Per Hour (PPH) - PeoplePerHour.com and if so what's there (except obviously it is fraudulent) to stop me having a friend set themselves up as the supplier and taking the commision hit as a small price for 20 points?

Would a real business use PPH to find people to do work for them? I am sure someone will say some small businesses do but I still can't think it won't stand up when HMRC come sniffing. Remember when being investigated you are on the backfoot to prove you are a valid business. If you are doing this to create the impression you are a company you will fail, just as you will with the shared office. They are not stupid.

You do like your manufactured airy fairy workarounds don't you.

[speling bee]

I cannot see how a client cannot know if you substitute (or subcontract for that matter). It is in most contracts that you can do it with some form of agreement with the client. If you don't agree it you are in breach for a start and your working conditions will not reflect the contract. It will also put you in a legal situation where your sub will have access to client information to some level that he/she has not signed data polices/NDA/whatever. In most cases letting someone else work on client data without asking them is also pretty unprofessional as well (unless there is an agreement saying you can do this of course without telling them).

Head is spinning this this now but I am sure that you can subcontract which isn't a substitution in some cases, just how to explain it. Just cause you subcontract I don't think means you have substitution covered. The legalities behind a subcontract agreement and a substitution will be different as well I am sure as one can exist without the other but the other needs both (wtf, does that even make sense?!?!) I bet if the clients were aware of this discussion an extra clause about subcontracting would appear.

I don't tend to work with NDAs so no issue there. I am seriously thinking about sub-contracting some work out and advising my client. Not a substitution. Not a sham as it enables me to take more work on.

[malvolio]

... Maybe Mal just wanted everyone to shut up about it and not let the cat out of the bag so HMRC don't cop on and change the rules yet again?

You may choose to think so. I couldn't possibly comment...

[Notascooby]

Would a real business use PPH to find people to do work for them? I am sure someone will say some small businesses do but I still can't think it won't stand up when HMRC come sniffing. Remember when being investigated you are on the backfoot to prove you are a valid business. If you are doing this to create the impression you are a company you will fail, just as you will with the shared office. They are not stupid.

You do like your manufactured airy fairy workarounds don't you.

If I wanted to get a web presence for my LTD I'd certainly not be looking to deal with a full-blown design agency.

If I could get a fixed price quote to deliver this via PPH then I could easily argue that I'm getting the best value for money.

Similarly if there was a specific small-scale piece of development (this could be as simple as an excel macro) that could be given to the business as an EUC then I'd not got out to the market looking for a VBA developer for 3 days work, I'd use the likes of PPH to see put it out to tender and get the cheapest quote. A bit of small scale "best-shoring". So I think its a legit vehicle.