IR35 agent games - I forgot about them

[northernladuk]

Fortunately this is 7 day payment terms and 7 day self billing linked to a timesheet so limited risk there. I do think there is a mistake on the determination as they agreed they would not challenge any substitute I sent but then said they would pay them direct rather than via my co! Flip that to a no and it comes out as outside. How would providing a substitute to be paid direct by the client work in practice anyway?

It wouldn't because it's not substitution. You are just sourcing another body on their behalf. The whole idea of substitution being good for outside is that a ltd co can send one of it's resources to complete the work so it's not one of personal service. The fact they want you and if it's not you they'll pay someone else is clear indication of personal service so that's a fail. The role is inside.

So like I said, I'd be worried because they don't know what they are doing.

And that's 7 days between you and the agent isn't it? Eek's example is between client and agent which you don't have sight of. It's likely the agency is factoring the 7 days and taking the risk the payment from teh client is much longer.

[BlueSharp]

It wouldn't because it's not substitution. You are just sourcing another body on their behalf. The whole idea of substitution being good for outside is that a ltd co can send one of it's resources to complete the work so it's not one of personal service. The fact they want you and if it's not you they'll pay someone else is clear indication of personal service so that's a fail. The role is inside.

So like I said, I'd be worried because they don't know what they are doing.

And that's 7 days between you and the agent isn't it? Eek's example is between client and agent which you don't have sight of. It's likely the agency is factoring the 7 days and taking the risk the payment from teh client is much longer.

Agreed, but as I said they have already accepted the right to substitute on the determination, the oddity is how the sub is paid. Outside SDS and tight payment terms are an acceptable risk in this situation to me. Even if they issued an outside or no determination these could also be changed mid contract. This latest evolution of the determination is not much different from the working practice reviews.

But I'm most certainty not going to commit tax fraud by not doing due diligence or ignoring the determination so lets see if it comes through. In the mean time I'm back on the market :-)

[northernladuk]

Agreed, but as I said they have already accepted the right to substitute on the determination, the oddity is how the sub is paid.

No oddity. That is not substitution. Period. They will accept the right to souce someone else. They will not accept the right to substition.

As I said, they don't know what they are doing.. but it's becoming more apparent they aren't the only ones.

https://orangegenie.com/resources/do...e%20substitute.

Who arranges and pays the substitute?


If the client arranges for and/or pays the alternative worker, this is replacement rather than substitution. To count as substitution, and to be effective for IR35 purposes, the substitute must be working as a representative of your limited company. They should be chosen by you, and paid by your company . The client should pay your company as normal for services provided by the substitute.

https://www.qdoscontractor.com/ir35/...f-substitution

Many contractors get confused over how it would be possible to send a substitute in their place if there are no other employees within their company besides themselves. However, it is worth noting that a substitute does not necessarily have to be an employee of the limited company. A substitute can be anyone who the contractor may know of that works within the same field, or alternatively, it could be somebody that is sourced via a networking website or agency. For substitution to be considered genuine, the limited company must remain liable for all costs associated with the substitute. When substitution occurs, the limited company must be paid as per usual by the client and the company will pay the substitute directly.

Irrelevant but interesting point because this is replacement not substitution, by putting conditions on the substitution I believe it's fettered which doesn't meet the requirement for IR35. It has to be unfettered, no conditions attached. Now most articles talk about the ability for the client to accept but that's just one condition. I'm guessing by putting conditions on payment then that's fettered.

Outside SDS and tight payment terms are an acceptable risk in this situation to me. Even if they issued an outside or no determination these could also be changed mid contract. This latest evolution of the determination is not much different from the working practice reviews.

Correct but the fact they don't know what they are doing makes the risk on the SDS unacceptable. It's ok saying a client might change it but when they can't get it right then it's almost certainly going to be inside so is it really still an acceptable risk to you?

But I'm most certainty not going to commit tax fraud by not doing due diligence or ignoring the determination so lets see if it comes through. In the mean time I'm back on the market :-)

Due diligence like understanding what substitution is?

[hobnob]

Following up from NLUK's point, it might be easier to understand substitution for other job roles.

For instance, suppose that you were putting new carpet in your house, and the cost of the carpet includes fitting. On day 1, someone turns up to do the first room. At the end of the day, they say "Right, I'm off, see you tomorrow." On day 2, someone different turns up because the first person is off sick. That's substitution, i.e. you're paying the carpet shop to send a fitter, but not a specific person. As long as the new person is equally qualified, you can't complain.

There would be a similar concept if you booked a minicab: you're dealing with the company, and then they will send a driver, but the choice of driver is up to them.

[northernladuk]

Following up from NLUK's point, it might be easier to understand substitution for other job roles.

For instance, suppose that you were putting new carpet in your house, and the cost of the carpet includes fitting. On day 1, someone turns up to do the first room. At the end of the day, they say "Right, I'm off, see you tomorrow." On day 2, someone different turns up because the first person is off sick. That's substitution, i.e. you're paying the carpet shop to send a fitter, but not a specific person. As long as the new person is equally qualified, you can't complain.

There would be a similar concept if you booked a minicab: you're dealing with the company, and then they will send a driver, but the choice of driver is up to them.

Nice simple analogy that. To expand on that in both the cases the carpet fitter would turn up knowing what he's putting down and gets on with it, with the cab he will know where to pick up/drop off and times. They've been brought up to speed not on your time to carry the work on.

It is your responsibility to get that person up to speed to substitute in on your time not the client. A sub carries on your work, not starts again.

[jamesbrown]

Following up from NLUK's point, it might be easier to understand substitution for other job roles.

For instance, suppose that you were putting new carpet in your house, and the cost of the carpet includes fitting. On day 1, someone turns up to do the first room. At the end of the day, they say "Right, I'm off, see you tomorrow." On day 2, someone different turns up because the first person is off sick. That's substitution, i.e. you're paying the carpet shop to send a fitter, but not a specific person. As long as the new person is equally qualified, you can't complain.

There would be a similar concept if you booked a minicab: you're dealing with the company, and then they will send a driver, but the choice of driver is up to them.

Ironically, carpet fitters and cabbies both tend to be self-employed

A further irony and difficulty with substitution as a concept is that it's completely alien in proper B2B contracts that don't involve so-called personal service companies. Assignment and subcontracting are common, but substitution is a weird concept that has little relevance outside employment status case law. Moreover, the test is a right of substitution that is not unreasonably fettered. It is not a substitution. It is not a right of substitution without conditions. It is a stupid concept, but it is basically the employment case law test we have for lack of personal service.

[Guy Incognito]

Well a new one for me as I have not dealt with agents for a few years!


Agent: Yes the role is outside IR35
Contract: Looks outside IR35, no mention of IR35 determination (small alarm bell). Obv request the determination.
Determination sent : inside IR35.
Agent intends to pay Ltd Co invoices without operating PAYE or umbrella but with lots of indemnity clauses I will be liable for tax if HMRC come after them

Push back on agent stating my day rate for inside is x + 25% this or remove the tax clauses.

Not sure what else to do, more than happy to walk over it.

Thoughts?

Just cross the clause out of the contract, sign it and send it back. They won't read it.

[simes]

I had something similar. Not sure it was a game but since it's not worth its own thread.

Agent: I have a contract at Xxx, it is Outside.
Me: If it is at Xxx, I know for a fact they have just blanket banned Outside gigs.
Agent: No, this one is Definitely Outside.
A bit of back and forth...until I acquiesce and send them my CV and detail.
Agent: I need your Confirmation to represent and agree rate and Inside
Me: No, I said, and you agreed, Outside, OUTside, OUTSIDE
Agent: Ah yes, I need to send another email. It will be Inside Ltd.!

FFS. But then, the below is how she writes so Perhaps I should have been forewarned and armed.

"Yes they don’t give outside that’s true , but we submitted many profile through Limited Inside IR35 where you have to pay your own taxes dear , trust me . , we will check with them with your profile they fine , please if don’t its fine , your profile was good and might you will selected so trying to help to understand process please give quick response so that I can submit , thank you"

To which I said, don't bother contacting me again.

[northernladuk]

FFS. But then, the below is how she writes so Perhaps I should have been forewarned and armed.

"Yes they don’t give outside that’s true , but we submitted many profile through Limited Inside IR35 where you have to pay your own taxes dear , trust me . , we will check with them with your profile they fine , please if don’t its fine , your profile was good and might you will selected so trying to help to understand process please give quick response so that I can submit , thank you"

To which I said, don't bother contacting me again.

Sounds like you've got the double whammy of an offshore agency as well there. Nothing good is going to come of that.

[MrC]

Not sure if this is so much an agent game (vs sheer ignorance) but got this from a agent in a job spec today:

The role is either inside or outside IR35 – 6 months rolling and they would need someone in the office 5 days a week.

Spoke to him and said what was the deal with this "inside or outside" and that it sounded sketchy being both outside but with imposed 5 days onsite. Agent said "oh no its nothing to do with IR35, its just a cultural thing at the client..."