Reply to: Accountax

[Accountax Consulting]

Our guarantee is not insurance it is simply our way of putting our money where our mouth is. It is our guarantee of the quality and expertise we offer. If our opinion is wrong we suffer the consequences pay the liability.

It is peace of mind for the contractor.

The magic number X is very small for Accountax. We will fight anyone’s corner however slim the chances of success. You do not need to have our guarantee for us to defend you. By putting a robust defence to HRMC we have won, even the unlikeliest of cases. Of the 800 + cases we have handled we have lost 4 or 5 and settled a couple. We have not had to pay out on any guarantee cases.

We do like a fight with HMRC. Not because we want to antagonise them but because we don’t believe contractors should be penalised. By simply rolling over the contractor can face hefty penalties and leave themselves open to personal liabilities.

As far as substitution is concerned as long as you have a genuine right to send a substitute you are not caught by IR35. A requirement for the substitute to be equally qualified and experienced does not affect that right and you do not need to have someone lined up. There have been numerous cases that have upheld this view. They are not binding but they have not been challenged either.

[tim123]

You are mistaking me for someone directly involved in the case.

.

Well you did give that impression.

But you are right in one respect. I am confusing my views upon whether I think that appeal has any chance of success, with the issue that I really wanted clarity on, that of whether the appeal was against points of fact or points of law.

tim

[tim123]

I think that current Case Law is that the RoS need only be "reasonably" unfettered, the working assumption being that the client has the right to demand the substitute has certain skills and ablilities. That is what was in the contractual terms, which clearly the AA had no intention of honouring. .

I still think that you are wrong. This is a 'hoped for' interpretation of the case law.

The only cases that (I know of, that) have turned on the RoS, are ones where that right was actually exercised. There are no cases (at a level that would be binding) where a RoS, that was not exercised, was deemed to be a critical factor in making someone not an employee.

tim

[tim123]

The obvious ones, on a fairly cursory reading of the Case Law, are that he agrees that the right of Subsitution does not need to be exercised to be valid but then decides that it was a sham (based on the AA's man verbally repudiating the terms stated in the written contracts signed by all three parties by insisting he would go through the full interview process),

And where is the case (or statue) law that says that he can't do this? ISTM he made a finding of *fact* that the substitution clause was a sham. Something that ISTM, he was perfectly entitled to do. He may have wrongly analysed the evidence to create that fact, but I can't see how he was wrong in law in allowing himself to do so? (and this is my main point of contention with your comment)

Plus, although I haven't tried to deconstruct the detail, Hillier seems to think that asking the contractor to apply his skills to resolving a given problem in his own way denotes D&C.

Which IMHO it is. You cannot expect to construct a world where D&C is only telling you "how to do" your job, otherwise anybody with a profession qualification would not be an employee.

Telling you *which* job to do today, in which order you should do them or even insisting that one is completed today, could be enough D&C to create an employer-employee relationship and I think that you will find the are cases where judges have stated this (though possibly not one which turned on this)

I'm not a lawer but the appeal would seem to have some merit.

If it clarifies these point, I agree, but I can't agree that you have a greater than 10% chace of a win on these points.

tim

[THEPUMA]

I think that current Case Law is that the RoS need only be "reasonably" unfettered, the working assumption being that the client has the right to demand the substitute has certain skills and ablilities. That is what was in the contractual terms, which clearly the AA had no intention of honouring.

So if we are to accept verbal evidence over legal contracts, then why did the SC not equally accept the contractor's assertion that the AA was wrong and their interpretation of reality did not apply.

The whole thing is a mess, and potentially sets some wide-ranging precedents (like, for example, we can tear up any and all written contracts if one side unilaterally decides to ignore them). That is why it is being appealed.

The case law is that RoS must "not be unreasonably fettered" which I think is slightly different to what you are saying.

I don't think the contractor was able to assert that he could have used a substitute because if the AA declined the substitute (whether or not they were contractually entitled to), it didn't make any difference what the contractor did. Therefore, I think the SC was right to give more weight to the AA's viewpoint.

[malvolio]

I don't think MOO was being argued for the taxpayer in this case so that may be a bit of a red herring.

Regarding substitution, the 2 points above are not mutually exclusive. It is perfectly reasonable for someone to accept that substitution does not need to have taken place to be effective but require that there be an unfettered right of substitution, which he found that there was not.

In this case, Jon Bessell apparently testified that Miss Tooze could have decided that she did not want a substitute and that is why I have some sympathy with Hellier's stance.

Hellier took a novel approach in this case by trying to construct the hypothetical contract between Bessell and the AA using the verbal evidence as more important than the written contracts.

I think that current Case Law is that the RoS need only be "reasonably" unfettered, the working assumption being that the client has the right to demand the substitute has certain skills and ablilities. That is what was in the contractual terms, which clearly the AA had no intention of honouring.

So if we are to accept verbal evidence over legal contracts, then why did the SC not equally accept the contractor's assertion that the AA was wrong and their interpretation of reality did not apply.

The whole thing is a mess, and potentially sets some wide-ranging precedents (like, for example, we can tear up any and all written contracts if one side unilaterally decides to ignore them). That is why it is being appealed.

[THEPUMA]

The obvious ones, on a fairly cursory reading of the Case Law, are that he agrees that the right of Subsitution does not need to be exercised to be valid but then decides that it was a sham (based on the AA's man verbally repudiating the terms stated in the written contracts signed by all three parties by insisting he would go through the full interview process), and that there was a budgetary constraint on time worked that he interpreted as defining MOO despite the contractor billing time on his own basis and not a simple 40 hours a week flat rate. Plus, although I haven't tried to deconstruct the detail, Hillier seems to think that asking the contractor to apply his skills to resolving a given problem in his own way denotes D&C.

I'm not a lawer but the appeal would seem to have some merit.

I don't think MOO was being argued for the taxpayer in this case so that may be a bit of a red herring.

Regarding substitution, the 2 points above are not mutually exclusive. It is perfectly reasonable for someone to accept that substitution does not need to have taken place to be effective but require that there be an unfettered right of substitution, which he found that there was not.

In this case, Jon Bessell apparently testified that Miss Tooze could have decided that she did not want a substitute and that is why I have some sympathy with Hellier's stance.

Hellier took a novel approach in this case by trying to construct the hypothetical contract between Bessell and the AA using the verbal evidence as more important than the written contracts.

[malvolio]

You are mistaking me for someone directly involved in the case.

As it happens, I have some sympathy for the stance Hellier took. It seems reasonable and logical to me. But I am not a legal expert and cannot tell you whether there are any flaws in his logic, based upon the case law precedent. That is what the appeal will decide.

The obvious ones, on a fairly cursory reading of the Case Law, are that he agrees that the right of Subsitution does not need to be exercised to be valid but then decides that it was a sham (based on the AA's man verbally repudiating the terms stated in the written contracts signed by all three parties by insisting he would go through the full interview process), and that there was a budgetary constraint on time worked that he interpreted as defining MOO despite the contractor billing time on his own basis and not a simple 40 hours a week flat rate. Plus, although I haven't tried to deconstruct the detail, Hillier seems to think that asking the contractor to apply his skills to resolving a given problem in his own way denotes D&C.

I'm not a lawer but the appeal would seem to have some merit.

[Ruprect]

Because Accenture aren't attempting to prove a taxation status by the use of this clause, they are simply trying to have a clause which meets their business needs.

As to proving the taxation status, the position of there being a sub that the client will accept will be looked at "in general", I.E is there pool of alternative people who could do this job, not specifically is Mr Smith available on Tuesday.

tim

And why is there any difference between Accenture's contract and a contractors? IMO there isn't, and there shouldn't be. How could anyone start the next Accenture if there was a difference? You're effectively saying that you can't run a business with a view to future growth (i.e. build capital then take people on) - one set of rules for one business, one set for another. This is a key problem with this (attempted) legislation I think.

[THEPUMA]

You must have read a different set of fact to me then.

ISTM that he found:

that there was a RoS, fettered to the point where it was virtually useless.
there was lots of MOO, the contractor got paid for doing nothing.
there was lots of D&C, he did work that was allocated to him on the day.

But he did have another client that his did 1 day's work for in 4 years, oh and he paid a few hundred pounds for a training course.

you have no chance.

tim

You are mistaking me for someone directly involved in the case.

As it happens, I have some sympathy for the stance Hellier took. It seems reasonable and logical to me. But I am not a legal expert and cannot tell you whether there are any flaws in his logic, based upon the case law precedent. That is what the appeal will decide.

[tim123]

No the appeal will be that Hellier misapplied the law based upon the facts he determined.

You must have read a different set of fact to me then.

ISTM that he found:

that there was a RoS, fettered to the point where it was virtually useless.
there was lots of MOO, the contractor got paid for doing nothing.
there was lots of D&C, he did work that was allocated to him on the day.

But he did have another client that his did 1 day's work for in 4 years, oh and he paid a few hundred pounds for a training course.

you have no chance.

tim

[tim123]

IMHO this is carp. If you were accenture and you had a consultant (A) in with a client X (for the sake of argument lets assume that this is the only consultant they have with the speciality that the client requires), and then a year later engage another client to which they want to send A. They have a substitution clause with client X, so they then recruit consultant B and send them in to client X.

At the point the contract is created there is no knowledge of the existence of the ready and willing sub, yet the clause can be exercised at a later date. Why is this any different for contractors?

Because Accenture aren't attempting to prove a taxation status by the use of this clause, they are simply trying to have a clause which meets their business needs.

As to proving the taxation status, the position of there being a sub that the client will accept will be looked at "in general", I.E is there pool of alternative people who could do this job, not specifically is Mr Smith available on Tuesday.

tim

[THEPUMA]

These would appear to be appeals against findings of fact.

ICBW but the judge appears to have come to his conclusion on these points after questioning witnesses. Judges don't interview witnesses to make findings of law, they do that by squirreling away at their law books.

tim

No the appeal will be that Hellier misapplied the law based upon the facts he determined.

[Qdos Contractor]

I'm waffling a bit, but what I'm getting it is once you've approved my insurance cover with you, and assuming I've provided accurate details, there should be no scenario in which I have to pay out to HMRC. Is that correct?

Yes, that is correct. Unless you have made any clear misrepresentations on the application form (which has never happened).

The rejections I refer to are if someone applies for TLC insurance who has no chance of ever being considered compliant (i.e. no subs, control etc etc). This is at the initial risk assessment, not at the point of a claim.

A TLC policy holder has never paid out on the liabilities and we've never refused representation. That's the point of the risk assessment.

[Ruprect]

IMHO: what makes a subs clause exercisable, is the existance of a ready and willing substitute that the client is prepared to accept.

IMHO this is carp. If you were accenture and you had a consultant (A) in with a client X (for the sake of argument lets assume that this is the only consultant they have with the speciality that the client requires), and then a year later engage another client to which they want to send A. They have a substitution clause with client X, so they then recruit consultant B and send them in to client X.

At the point the contract is created there is no knowledge of the existence of the ready and willing sub, yet the clause can be exercised at a later date. Why is this any different for contractors?