When the client scews the result to put you inside IR35

[LondonManc]

I honestly don't get what your problem is here.

This client is willing to give you an outside determination if you say that you would pay a sub if you brought one in. They'd pay you, you'd pay the sub. Why would you not just jump at that, get your outside determination, and move forward?

Were you planning on bringing in a sub and asking them to pay him? If so, why? If not, then who cares if they are covering their backsides in this way?

I don't get it. We're seeing people where the client has declared everyone inside, where the client is clueless, where the client still doesn't know what they are doing. You have this nice client who is asking you to sign a probably pointless statement and they'll declare you outside. Just do it.

Paying a sub one day @£500 versus paying inside IR35 tax rates and losing all your expense allowances. Hmmm. Can I phone a friend?

[Whorty]

Could be being dumb here, and I'm sure someone will call me out, but I do have a question on subs in practice if you came through an agency ....

Let's say I get a PS gig at £500 pd through an agent. Agent gets 15% so £75 per day. Client therefore pays £575 to agent, agent pays MyCo £500. All nice and simple.

Now let's say I know someone keen to go contracting and he/she has same skill set as me. But, as they are new to contracting they're happy to take £450 pd.

I think, wey hey, i'll sub them in, pay them £450, cream £50 each day for doing naff all, and go and get myself a sun tan (or new contract ... whatever suits).

Now clearly there are risks to this .. new guy/gal is rubbish and I get called back in but now I have a new contract/haven't finished my book yet whilst sitting on the beach. but how would agencies feel about this? Would their contract with MyCo even allow this scenario to happen, even if the client agrees?

Obviously if you're direct, then less of an issue, but via an agent?

[northernladuk]

I think, wey hey, i'll sub them in, pay them £450, cream £50 each day for doing naff all, and go and get myself a sun tan (or new contract ... whatever suits).

But you aren't doing naff all really. You have to organise payments in and then out to the sub but no, you aren't doing the work. I'd expect if you do it properly you should be keeping in touch with the client and the sub. You are still ultimately responsible.

I theory you should also be spending time with your sub to get them up to speed. The Sub will expect paying for this so it's coming out of your pocket. Putting a sub in purely to get £50 a day isn't really going to work. It might as they might accept the bod but it shouldn't. Depends on the situation and length of sub.

Now clearly there are risks to this .. new guy/gal is rubbish and I get called back in but now I have a new contract/haven't finished my book yet whilst sitting on the beach. but how would agencies feel about this? Would their contract with MyCo even allow this scenario to happen, even if the client agrees?

Eh?? It's written in to your contract that you can sub. It's part of the ESS tool you can sub that the client signed up to. It's all there in writing and is a pretty fundamental part of keep ourselves outside of IR35. Agent doesn't care. They do naff all for their money like you say you are going to. As long as they keep getting their money they shouldn't care.

EDIT : Actually that said, if you are putting in another bod just to cream some money off that could look more like you resourcing a gig than subbing it at which point the agent might start getting twitchy. It would depend on the situation, length of gig etc but am just guessing here.

[SueEllen]

If you are in a public sector gig the agency has to tell the client the amount they are paying you so they can publish the anonymous data either on their website or if someone makes an FOI request.

The only time agency percentages are virtually transparent is in the PS.

[LondonManc]

Could be being dumb here, and I'm sure someone will call me out, but I do have a question on subs in practice if you came through an agency ....

Let's say I get a PS gig at £500 pd through an agent. Agent gets 15% so £75 per day. Client therefore pays £575 to agent, agent pays MyCo £500. All nice and simple.

Now let's say I know someone keen to go contracting and he/she has same skill set as me. But, as they are new to contracting they're happy to take £450 pd.

I think, wey hey, i'll sub them in, pay them £450, cream £50 each day for doing naff all, and go and get myself a sun tan (or new contract ... whatever suits).

Now clearly there are risks to this .. new guy/gal is rubbish and I get called back in but now I have a new contract/haven't finished my book yet whilst sitting on the beach. but how would agencies feel about this? Would their contract with MyCo even allow this scenario to happen, even if the client agrees?

Obviously if you're direct, then less of an issue, but via an agent?

I'd suggest that as long as the agent keeps getting his £75 a day he won't care. If that's not the case, he shouldn't consider himself an agent.

If there is an issue, you have to get back on site and suck it up or you lose the £50 you're making plus anything you'd make from taking the contract back off your sub.

[malvolio]

Just to be pedantic, your £500 a day sums are wrong. If the agency is on 15% he will charge the client £588 and a bit, probably rounded up to £600. You get some of his money, not the other way round.

[Whorty]

But you aren't doing naff all really. You have to organise payments in and then out to the sub but no, you aren't doing the work. I'd expect if you do it properly you should be keeping in touch with the client and the sub. You are still ultimately responsible.

I theory you should also be spending time with your sub to get them up to speed. The Sub will expect paying for this so it's coming out of your pocket. Putting a sub in purely to get £50 a day isn't really going to work. It might as they might accept the bod but it shouldn't. Depends on the situation and length of sub.


Eh?? It's written in to your contract that you can sub. It's part of the ESS tool you can sub that the client signed up to. It's all there in writing and is a pretty fundamental part of keep ourselves outside of IR35. Agent doesn't care. They do naff all for their money like you say you are going to. As long as they keep getting their money they shouldn't care.

EDIT : Actually that said, if you are putting in another bod just to cream some money off that could look more like you resourcing a gig than subbing it at which point the agent might start getting twitchy. It would depend on the situation, length of gig etc but am just guessing here.

That's exactly my point, won't the agency get twitchy that they are finding the work, but you are creaming off the top? I know that you're really not (or at least shouldn't be) doing naff all, but I was painting the extreme picture. Just pointing out/asking if there would be an alignment between what the tool/PS might agree to, to get you outside, but in reality what the agency would actually agree to as your contract is with them, and not the PS.

Using the builder analogy doesn't work for many of us as builders find their own gigs, and hence there is no intermediary to get in the way.

But to contradict you, or at least put it out there for an agency to respond to, they will care as they are doing all the hard work to win the clients, get on the client PSLs etc. As much as many on here see agents as pimps, or worse, they do a very valuable and difficult job (if you don't think so, try a day or 2 of cold calling and see how you feel at the end of it). Or better still, stop using agents and cold call all those potential clients yourselves to win the work and see how far you get, so yes, I think many agents may feel short changed if we skimmed off the top.

[WordIsBond]

I think many agents may feel short changed if we skimmed off the top.

I don't see it. They charge the client £588, pay you £500. How you satisfy the client and how you spend that money is your business, not theirs, they are getting their cut.

At renewal time, they might not be open to proposals to cut their percentage from 15% to 12%, though. They might laugh in your face. But they aren't likely to care through the course of the contract.

Also at renewal time, they may talk to your sub and say, "Hey, we'll give you £475 instead of £450 if you go direct with us. Let's cut out the middle man and split the difference." But until then, who cares?

[Whorty]

I don't see it. They charge the client £588, pay you £500. How you satisfy the client and how you spend that money is your business, not theirs, they are getting their cut.

At renewal time, they might not be open to proposals to cut their percentage from 15% to 12%, though. They might laugh in your face. But they aren't likely to care through the course of the contract.

Also at renewal time, they may talk to your sub and say, "Hey, we'll give you £475 instead of £450 if you go direct with us. Let's cut out the middle man and split the difference." But until then, who cares?

Fair enough, it was just a thought as these conversations are progressing. Be interesting to know if anyone has ever sub'd someone in, and they themselves came through an agency, and how all this panned out in reality rather than our assumed reality.

[DKB]

To update on my friends Substitute which maybe didn't come across as clear as it could have done.....

His client said they'd use the Employment Status Tool and base their decision on that.

They then changed focus and have pretty much forgotten what the tool says but have implicitly written to contractors asking who pays the sub if a sub is made. The outcome is that if the contractor pays the sub then they'd be deemed outside of IR35. Apart from the feeling of moving the goalposts a bit, no real problem here.

They've now deemed one guy INSIDE of IR35 because despite the fact his contract says he can sub, the client says he's allowed to sub, but because his company doesn't employ anybody, they don't see who he can sub to so have said he's inside IR35 due to the fact he has nobody to sub to.

They have of course had it explained to them how substituting works so are now contemplating removing the ability to sub and therefore every contractor will be inside IR35.