Reply to: Is lack of a genuine right of substitution an automatic IR35 fail?

[northernladuk]

I'm unsure how many red Xs on the WP side it takes before they declare you inside. I'll hopefully get it away tomorrow and see where it goes from there.

I don't believe they declare you inside. Just hightblir the risk that in their expert opinion it's not a water tight outside.

[Blert596]

It was the working practices that failed, the contract passed. I asked them for a separate document containing just the contract review element that didn't have "INSIDE IR35 Due to WP" in big red lettters on the front but they refused!

I have the same response. Green ticks throughout or the odd Neutral on the contract side of it but WP failure.

I'm in the process of drafting a reply as of the 5 red X signs I got at least 2 of them shouldn't be. I misread one and said I had contact with the clients customers (I don't, I actually thought it said clients subcrontactors), and another one where it says I have to have permission for leave to be granted, I've always just informed them that I'm taking leave and that my current forecasted schedule is up to date. So that's 2 ticks gone and the others with explanations and examples should be turned to green hopefully, or at least a N.

I'm unsure how many red Xs on the WP side it takes before they declare you inside. I'll hopefully get it away tomorrow and see where it goes from there.


Hopefully the official ID card issued by the client for entry, which has my picture on it and the words "I am on a contract" help. Compared to the permies "I am employed here" wording.

[jamesbrown]

It was the working practices that failed, the contract passed. I asked them for a separate document containing just the contract review element that didn't have "INSIDE IR35 Due to WP" in big red lettters on the front but they refused!

A good reason to not go w/ the cheap review. TBH, I don't know why they even offer it.

[NeverBackToPerm]

I don't think you meant to contradict this, but worth stating nonetheless:

A fail on the contract by Qdos does not invalidate the insurance providing that you can agree to the application statements for the policy which are based on the working practices and not the contract itself.

It was the working practices that failed, the contract passed. I asked them for a separate document containing just the contract review element that didn't have "INSIDE IR35 Due to WP" in big red lettters on the front but they refused!

[sludgesurfer]

And that knowledge would include the risk of not being insured after the QDOS assessment.

I don't think you meant to contradict this, but worth stating nonetheless:

A fail on the contract by Qdos does not invalidate the insurance providing that you can agree to the application statements for the policy which are based on the working practices and not the contract itself.

[northernladuk]

Sc cleared role, all contractors on project declared outside, probably, 35-40 during the course of the project.

That's very interesting. If they get back to me I'll ask about that. I did poke them already and got rebuffed with the explanation above so I doubt it will be worth challenging.

[Anonimouse]

Sc cleared role, all contractors on project declared outside, probably, 35-40 during the course of the project.

[northernladuk]

Wrong! Just finished a year at boe we were all declared outside, on headed notepaper.

Are you in an SC cleared role?

[Lance]

Wrong! Just finished a year at boe we were all declared outside, on headed notepaper.

All contractors?
Or all the people you spoke to?
Or a different all?

[cojak]

What, like HMRC?

[Anonimouse]

Very grey area this one. It's been dismissed in case law as largely irrelevant in the past. It's also been called a sham by a judge yet it factored heavily in recent cases. It's often touted as one of the main pillars but even Kate Cottrell has said in the past it's a minor one.

The test that has been using in past cases is that it is an option and in the contract. The fact it hasn't been used is irrelevant. It's there as an option. BUT... if you then ask your client further down the line and they refuse then you've just shot yourself in the foot. It's OK if it's unused, it's ruined if the client confirms they won't. There is the argument about breach of contract but that's another discussion.

So who really knows. Bit of a case of 'do you feel lucky punk'.

I do think however if people are giving out contracts with fettered RoS in this day and age then I think it's the tip of the iceberg and something else is wrong. It's well known enough to at least get the wording right. If they haven't bothered doing it right first time then what else is wrong with the contract?

Rather annoyingly some clients like Bank of England deem all their contracts inside due them not being able to allow RoS dues to SC and security purposes. I think this is wholly wrong. They 'would' offer it except for the fact they can't. That's completely different to not accepting one as they want use as a person so an IR35 problem.

If a fairly standard client won't accept a sub though then in this day and age I'd be worried. I don't think it's an automatic fail but with GSK going on, April 2020 coming and so on I would not be taking on a gig that won't allow a sub.

Wrong! Just finished a year at boe we were all declared outside, on headed notepaper.

[jamesbrown]

Yes, I mean that is the actual test in case law. A right of substitution that is not unreasonably fettered. Obviously, based on the hypothetical contract, looking through any contract word collage.

[edison]

On the last couple of contract reviews QDOS have done for me, the original RoS agency draft contract clause was a fail. From memory, the clause was changed to say that the client could only object to a proposed substitute on 'reasonable grounds'. As some have said above, it is a grey area but realistically there's no way you can force a client to take a substitute so a test of reasonableness is maybe the only defence.

[northernladuk]

Very grey area this one. It's been dismissed in case law as largely irrelevant in the past. It's also been called a sham by a judge yet it factored heavily in recent cases. It's often touted as one of the main pillars but even Kate Cottrell has said in the past it's a minor one.

The test that has been using in past cases is that it is an option and in the contract. The fact it hasn't been used is irrelevant. It's there as an option. BUT... if you then ask your client further down the line and they refuse then you've just shot yourself in the foot. It's OK if it's unused, it's ruined if the client confirms they won't. There is the argument about breach of contract but that's another discussion.

So who really knows. Bit of a case of 'do you feel lucky punk'.

I do think however if people are giving out contracts with fettered RoS in this day and age then I think it's the tip of the iceberg and something else is wrong. It's well known enough to at least get the wording right. If they haven't bothered doing it right first time then what else is wrong with the contract?

Rather annoyingly some clients like Bank of England deem all their contracts inside due them not being able to allow RoS dues to SC and security purposes. I think this is wholly wrong. They 'would' offer it except for the fact they can't. That's completely different to not accepting one as they want use as a person so an IR35 problem.

If a fairly standard client won't accept a sub though then in this day and age I'd be worried. I don't think it's an automatic fail but with GSK going on, April 2020 coming and so on I would not be taking on a gig that won't allow a sub.

[BlueSharp]

And that knowledge would include the risk of not being insured after the QDOS assessment.

I agree. That's why I turned down the QDOS insurance and stuck with IPSE as I can't see a way of proving you have the RoS in practice. When I asked QDOS that I have the right in my contract but it has never come up in conversation with the client about out how it would be executed, I was told by QDOS to confirm it with the client it existed in practice. Not really helpful as I would probably not execute the the RoS anyway.