Reply to: Have you ever used a Substitute - how do you go about this?

[GhostofTarbera]

I have a Sub also, I don’t pay them any money, I provide a service back to them to the same value. Not sure if IR35 bullet proof or not


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[ChimpMaster]

IPSE and QDOS have sample contracts. Shouldn't be much different than yours but for a fixed time.

There is an argument for a much simpler one but if you get it right once you should be able to re-use.

How will you be getting them up to speed on your time?

Seems to just be a normal contract on IPSE. But like you say, I could use my contract and amend as needed.

I'll be getting the Sub up to speed somehow. He's an old work colleague so we have a good working relationship.

Just did the CEST test again for fun. 6 questions in and "The intermediaries legislation does not apply to this engagement". Never thought I'd be this excited about this stuff.

I'll be charging the client my normal day rate and paying the Sub a percentage of that. Does that mean I'm a true 'consultancy' because I can make profit even when I'm not personally working? Even though it's only for 10 days

[northernladuk]

IPSE and QDOS have sample contracts. Shouldn't be much different than yours but for a fixed time.

There is an argument for a much simpler one but if you get it right once you should be able to re-use.

How will you be getting them up to speed on your time?

[ChimpMaster]

Hooray

Client has agreed to take a substitute while I am on holiday and then in the future "as and when needed".

Maybe not the Silver Bullet, but hopefully a significant big marker for "out of IR35". Will be especially useful come next April if I'm still contracted here.

I'll be engaging the individual myself and paying them from my company - still invoicing the client as normal and in full.


Do let me know if you have a suitable contract I can use.

And do let me know if there is anything I should look out for - it's my first ever Sub

[WordIsBond]

Just remember that the substitute takes over the current contract for the duration, they are not a sub-contractor working for you. That means that they have to hit all your agreed targets and contractual conditions which includes charge rates - which means in turn you will have to negotiate with them how much of the rate they get to keep.

This is not entirely true.

YourCo is contracting to meet targets and contractual conditions which includes charge rates. You can work half the time, work the first two months and then disappear for a month while you send someone else, then come back. There is nothing in the law that says the substitute must take over for the duration. Nor does the law specify whether your substitute is an employee of yours or a contractor.

[Shiny]

All this talk of silver bullets just had me pondering.

Thanks for your insight.

[northernladuk]

If a client has engaged multiple contractors, is there anything stopping the contractors from substituting each other to both "escape" IR35?

I suppose it would depend on the contracts, so contracts allowing, would it work if the client was on board?

Yes. The other contractors have got work to do. Client is hardly going to be impressed if you all stop doing the work you are supposed to be doing to step in for someone else for no other reason than your tax status.

And its so highly convoluted it just won't stand up to any scrutiny.

If it were that simple don't you think it would be standard practice?

And there is no 'escape' you are inside or you are outside.

[Shiny]

If a client has engaged multiple contractors, is there anything stopping the contractors from substituting each other to both "escape" IR35?

I suppose it would depend on the contracts, so contracts allowing, would it work if the client was on board?

[craigy1874]

Gathering IR35 is a must. Mails excluding your from meetings, photocopy of your pass if it's different to perms and so on.

The letter would put you a head of a vast majority of contractors so will stand you in good stead. If the client is so laid back he may be amenable to a confirmation of arrangements which is very useful. It means HMRC can't accuse you of yoir contract matching working conditions. QDOS do a CoA template so have a look on their site.

The fact you are putting so much effort in to your status in general also means you are way ahead of the game.

I'm not so sure any one thing is a silver bullet for IR35 so I don't thing its the best idea to put your gig at potential risk chasing it when you've already got good evidence. I seem to think (but I could be wrong) Batcher had some very strong evidence in his case but it still lasted years before they dropped it.

Invoking a substitution clause is most definitely a silver bullet.

[MrButton]

Charge your full rate and pay your sub less.

Happy to share the contract I use for subbing. PM me if you want it.

I use hellosign for handling the signing of the contract. It’s free and provides a decent level of traceability.

I’ve always engaged another ltd company contractor as it’s simply a business to business. I don’t know the implications of engaging someone direct and paying them directly.

[malvolio]

Just remember that the substitute takes over the current contract for the duration, they are not a sub-contractor working for you. That means that they have to hit all your agreed targets and contractual conditions which includes charge rates - which means in turn you will have to negotiate with them how much of the rate they get to keep.

But if it works properly then IR35 ceases to be an issue. Even CEST wold pass it.

[oilboil]

I don't care if I charge the client - but is this important? Can I charge them less for those 2 weeks?

The client won't be upset if you charge them less, however what happens if the sub turns out to be capable and can do everything they need...

Then they come to you and say they intend to keep the sub or would you mind doing the job at the lower rate

[northernladuk]

Confirmation of Arrangements is here.
Confirmation of Arrangements - IR35 Resources - Qdos Contractor

Just make sure you get it signed by a decision maker and not just the client manager. Maybe both if you are unsure.

[northernladuk]

Gathering IR35 is a must. Mails excluding your from meetings, photocopy of your pass if it's different to perms and so on.

The letter would put you a head of a vast majority of contractors so will stand you in good stead. If the client is so laid back he may be amenable to a confirmation of arrangements which is very useful. It means HMRC can't accuse you of yoir contract matching working conditions. QDOS do a CoA template so have a look on their site.

The fact you are putting so much effort in to your status in general also means you are way ahead of the game.

I'm not so sure any one thing is a silver bullet for IR35 so I don't thing its the best idea to put your gig at potential risk chasing it when you've already got good evidence. I seem to think (but I could be wrong) Batcher had some very strong evidence in his case but it still lasted years before they dropped it.

[ChimpMaster]

If you want evidence then get a mail from your client that they'd be happy to take a sub on for this time and then just file it. The fact you've got clear evidence the client would allow it is almost as strong as it happening.

On a side note though. Got to be careful bringing subs up with a client. If they turn round and say no you've just destroyed your own IR35 status. Sometimes it's better just to keep schtum.

This is actually a very good idea.

The reason I'm thinking about a sub is that it's almost the holy grail to get out of IR35 (isn't it?), according to CEST as well... yea I know CEST is tulipe but it tells us what HMRC/Government are thinking.

In my mind I have a strong case that I am outside of IR35, but I have been at this client for a long time now (...years) so every little bit helps.

The client manager is very amenable to my requests, having known me for so long. So getting an email 'accepting' a sub should be very possible.