Right of Substitution...Interesting case

[SueEllen]

Hmm interesting. Maybe I should have appended this to a thread not so long ago where people were thinking subcontracting some of the work out without telling the client would prove RoS. I thought this case was interesting that it showed how to prove RoS properly. I didn't think I was making a point to agree or disagree but probably cause I didn't post any context.

On another note how many British employees subcontract their work out?

If you work like the building trades i.e. they get other skilled workers in to do the jobs they can't do or don't want to do, but are responsible for quality control I doubt a judge would decide that you haven't used your right of substitution. (Funnily enough I just Googled and found this )

[MyUserName]

I would think that the RoS should be in place to a sufficient point where you can show it was a viable option and not just a box ticking exercise.

For example if you work in a secure environment and there are dozens of checks in place and you can show you have someone who has passed all of these checks who can sub you if needed then it might carry more weight than if you said you would find someone if you needed to.

However, it is all just different shades of grey.

[northernladuk]

I don't agree either with nluk either, so I'll add my sticking out tongue to that

This particular case outlines what the client requires from the contractor if they choose to subcontract the work. It has nothing to do with what HMRC require to prove that a substitution could be made. Indeed, it strengthens our case because in this situation the worker didn't know he had a RoS but the fact that RoS existed was a pointer to self employment. You could therefore reverse this and throw it back at the HMRC saying that just because the client wasn't aware of a RoS existing doesn't mean that it wasn't a realistic option...

Hmm interesting. Maybe I should have appended this to a thread not so long ago where people were thinking subcontracting some of the work out without telling the client would prove RoS. I thought this case was interesting that it showed how to prove RoS properly. I didn't think I was making a point to agree or disagree but probably cause I didn't post any context.

Surely it does have something to do with it though. If you don't meet the criteria for the client to accept a substitution how can you prove you have? If client says no then there is no substitution? You can try prove what you want but as in the JLJ case, if client says no subs you are screwed.

Dunno about that last sentance though. Someone has severely ****ed up if they are at a client that doesn't know RoS exists as it should be in the contract as per basic IR35 checks but get your meaning.

[Wanderer]

Sorry, can't agree with that

I don't agree either with nluk either, so I'll add my sticking out tongue to that

This particular case outlines what the client requires from the contractor if they choose to subcontract the work. It has nothing to do with what HMRC require to prove that a substitution could be made. Indeed, it strengthens our case because in this situation the worker didn't know he had a RoS but the fact that RoS existed was a pointer to self employment. You could therefore reverse this and throw it back at the HMRC saying that just because the client wasn't aware of a RoS existing doesn't mean that it wasn't a realistic option...

[TestMangler]

Yep. I think its cut and dried here that your in the clear IR35 sub-wise I reckon.

However, for a lot of us, I think client would look at me a bit funny if I suggested someone else came in instead of me....

They would probably be ecstatic You might send someone in that can make a decision for themselves

[psychocandy]

Sorry, can't agree with that I've done a sub and so has a colleague. Big client (sub was 'known' to the client). It was basically an "I'm not available for this two week period but can supply you with Mr xxx.xxxxx. Is that OK ?" scenario. Client organised access to site and network prior to the sub arriving. Simple as that. No checks, no disclosures, no application forms, no references, no agency crap.

Should also point out, I invoiced agency as usual, subby invoiced me, I paid subby. I also paid the subby less than I got paid. If that's not substitution, then excuse me all to hell !!

Oh, and f**k proving it to HMRC. HMRC can think/say what they like. What do you think a court or a tribunal would say about the situation I describe above ?

Yep. I think its cut and dried here that your in the clear IR35 sub-wise I reckon.

However, for a lot of us, I think client would look at me a bit funny if I suggested someone else came in instead of me....

[TestMangler]

Fair comment and each situation will be slightly different. I don't really see that as basis to disagree when the article clearly states in that situation it was required. The fact client organised access for the sub is more than was discussed in the previous threads which ended up with people thinking they could prove RoS when the client didn't even know the work hadn't been done by the contractor.

And just because the client is failing in his diligence to allow people to work on his site is no basis to disagree either. Your situation was slightly different that is all.

Not sure why you seem to think this is an attack on you and your situation though.

I'll tell you why, shall I ?

It's because I didn't read the article and just allowed myself to run off at the mouth/keyboard without having a clue about what i was talking about

[northernladuk]

Sorry, can't agree with that I've done a sub and so has a colleague. Big client (sub was 'known' to the client). It was basically an "I'm not available for this two week period but can supply you with Mr xxx.xxxxx. Is that OK ?" scenario. Client organised access to site and network prior to the sub arriving. Simple as that. No checks, no disclosures, no application forms, no references, no agency crap.

Should also point out, I invoiced agency as usual, subby invoiced me, I paid subby. I also paid the subby less than I got paid. If that's not substitution, then excuse me all to hell !!

Oh, and f**k proving it to HMRC. HMRC can think/say what they like. What do you think a court or a tribunal would say about the situation I describe above ?

Fair comment and each situation will be slightly different. I don't really see that as basis to disagree when the article clearly states in that situation it was required. The fact client organised access for the sub is more than was discussed in the previous threads which ended up with people thinking they could prove RoS when the client didn't even know the work hadn't been done by the contractor.

And just because the client is failing in his diligence to allow people to work on his site is no basis to disagree either. Your situation was slightly different that is all.

Not sure why you seem to think this is an attack on you and your situation though.

[TestMangler]

I think in reality he wouldn't have to go through all those steps but enough of them for the client to allow him to work so whatever steps the original contractor went through. He can't have not done any of them as no client would take anyone on that hasn't proved he has a right to work in the UK for example. I think what is meant here is followed the process to be accepted by the client, data security policies, whatever steps needed to get login.

Sorry, can't agree with that I've done a sub and so has a colleague. Big client (sub was 'known' to the client). It was basically an "I'm not available for this two week period but can supply you with Mr xxx.xxxxx. Is that OK ?" scenario. Client organised access to site and network prior to the sub arriving. Simple as that. No checks, no disclosures, no application forms, no references, no agency crap.

Should also point out, I invoiced agency as usual, subby invoiced me, I paid subby. I also paid the subby less than I got paid. If that's not substitution, then excuse me all to hell !!

Oh, and f**k proving it to HMRC. HMRC can think/say what they like. What do you think a court or a tribunal would say about the situation I describe above ?

[malvolio]

Simple. For the subbie to be demonstrably a subbie and not a replacement worker, he would need to be paid though YourCo under the existing contract.

Also that does not absolve the client's need for Due Diligence, as long as the subbie is assessed on the same criteria you were.

[northernladuk]

What if, for example, the original contractor for whom the sub was subbing did not go through any of the above ?

I think in reality he wouldn't have to go through all those steps but enough of them for the client to allow him to work so whatever steps the original contractor went through. He can't have not done any of them as no client would take anyone on that hasn't proved he has a right to work in the UK for example. I think what is meant here is followed the process to be accepted by the client, data security policies, whatever steps needed to get login.

[Ketchup]

Very interesting. On a lot of projects i work on, there are numerous contractors, each of them have met each of those criteria. Surely there must be a solution to demonstrate RoS amongst a group of contractors.

[TestMangler]

What if, for example, the original contractor for whom the sub was subbing did not go through any of the above ?

[northernladuk]

Just read the article on Contractor Weekly below...

IR35: Ignorance of Substitution Alters Nothing - Contractor Weekly

We had a discussion about this recently and it got very complicated with a big mix up between substitution and subcontract and comments about letting someone else doing work for the client but not telling the client would prove the contractor has substituted. In reality he as actually subcontracted some of the work so it is different.

The interesting thing in the article is that UK Mail defines a process the substitute would have to go through to be considered and it is more or less a full application which included

The completion of an application form.
Proof of the individual’s right to take up paid employment within the UK.
Proof of identification and residence.
Completion of a security declaration form.
Receipt of a Scottish basic disclosure.
Five years work [sic] history without gaps.
Five years work [sic] references.
Character references taken up orally and in writing, each covering a two year period within the previous period.
The ‘subcontractor’ was then required to declare in writing that he or she and their employees, agents or subcontractors had satisfactorily passed screening and vetting in accordance either with the Respondent’s procedure or one that they had developed which was their equivalent.

This person would then be considered a substitue (subcontractor) for the client and for HMRC to consider it.

I think this makes it pretty clear what consititutes substitution rather than subcontract a bit of the work out, which to be fair is in itself is a good pointer, if done correctly. But still, if you want to say you have used your RoS you need to be aware what the client considers a substitute before you can prove it to HMRC. It also makes me think this idea of naming a sub is pointless as it is just a paper exercise and to be proven the steps required by the client would have be followed...

Interested to hear anyone elses opinions or take on the article.