Reply to: Fake substitution?

[teapot418]

It does feel like a sham and a pointless one at that. Go in for one person for the week and let everyone else use that as the example...

Agreed - if one person has exercised their RoS, that shows that it is realistic for everyone.

[eek]

LOL. I can see why you are concerned about it being seen as a sham.

I thought you had some guys who were going to be wanting to take some days off in the coming month(s) and so would come in for a couple days here, a week there, to actually sub for guys.

One week of work subbing for different guys? Yeah, sounds like a sham to me. And yeah, it might put you at risk. I'd want to be PAID.

Tell them they need to give you at least two days each, and not all concurrently. Tell the first guy to take his other half to Paris for a few days and have you in, and then the second guy can say, "Hey, that's a good idea," and decide to take a few days off the next week and have you in. And so on.

Separate contracts with each of them, of course.

It does feel like a sham and a pointless one at that. Go in for one person for the week and let everyone else use that as the example...

[WordIsBond]

The plan is I do I week, subbing for a few different people.

LOL. I can see why you are concerned about it being seen as a sham.

I thought you had some guys who were going to be wanting to take some days off in the coming month(s) and so would come in for a couple days here, a week there, to actually sub for guys.

One week of work subbing for different guys? Yeah, sounds like a sham to me. And yeah, it might put you at risk. I'd want to be PAID.

Tell them they need to give you at least two days each, and not all concurrently. Tell the first guy to take his other half to Paris for a few days and have you in, and then the second guy can say, "Hey, that's a good idea," and decide to take a few days off the next week and have you in. And so on.

Separate contracts with each of them, of course.

[RonBW]

By not having the RoS is this an automatic IR35 fail regardless of passing other questions?

To prove inside IR35, HMRC need to show you have no right of substitution, you have a mutuality of obligation and that you are supervised, directed and controlled. To prove you are outside IR35, you need to prove that one of those three doesn't apply to you.

But you'd be daft to rule out one of the three things that you could rely on in an investigation.

[Kingman66]

By not having the RoS is this an automatic IR35 fail regardless of passing other questions?

[RonBW]

The plan is I do I week, subbing for a few different people.

Multiple contracts at the same time, or five different ones in the week?

[slogger]

Ah, so the obvious choice. I see that.

You did say 'people' in your first post. Does that mean they are all going to sub you for a couple of days and pass you around or was that just misleading and you are subbing for one guy only?

The plan is I do I week, subbing for a few different people.

[northernladuk]

It's in same team I worked with so shouldn't need any training..

Ah, so the obvious choice. I see that.

You did say 'people' in your first post. Does that mean they are all going to sub you for a couple of days and pass you around or was that just misleading and you are subbing for one guy only?

[slogger]

I'd be interested to know if the contractor intends skill you up and offer a seamless substitute or just putting a body in a seat. I don't think it will make much difference to what he's trying to achieve, just interested in the mechanics.

I also wonder if this going to kick off those ideas we see from time to time where a service matches up pseudo subs for each other.

It's in same team I worked with so shouldn't need any training..

[northernladuk]

I'd be interested to know if the contractor intends skill you up and offer a seamless substitute or just putting a body in a seat. I don't think it will make much difference to what he's trying to achieve, just interested in the mechanics.

I also wonder if this going to kick off those ideas we see from time to time where a service matches up pseudo subs for each other.

[eek]

OK then, it's all sorted.

Give a go - try it and see.

(I can't but help think that HMRC will see through this, but you've already accepted the risk so good luck.)

It's a risk but I can see why everyone wants him to do it. The substitution clause is fettered (i.e. client has to agree to the substitute) but now they've agreed to a substitute him actually going in as the substitute will leave HMRC with a very difficult argument to make - to the extent that its a case off to a higher tribunal or not worth fighting.

It would show that his own substitution clause (as a minimum) wasn't a sham and nor is that of other workers doing the same role. Personally I would be asking for a significant premium though (just look at all the risk removed by me coming in for that week).

[cojak]

Client has agreed it's OK for me to be a sub..I have experience of environment..also still currently security cleared. I believe re payment it will come directly from contractors own Ltd Co and not from the end client.

OK then, it's all sorted.

Give a go - try it and see.

(I can't but help think that HMRC will see through this, but you've already accepted the risk so good luck.)

[slogger]

Well it's all a moot point until they present the PS client with this 'solution'.

Or have they? The client has agreed to this?

Client has agreed it's OK for me to be a sub..I have experience of environment..also still currently security cleared. I believe re payment it will come directly from contractors own Ltd Co and not from the end client.

[cojak]

For one or two days that I have to take off anyway and also at a premium to my current rate then me being caught by ir35 shouldn't be an issue surely? Also will only be done prior to april

Well it's all a moot point until they present the PS client with this 'solution'.

Or have they? The client has agreed to this?

[slogger]

Who is asking you, the client or the contractors? (edit: I see you've answered this)

If the client is asking you to do that, and HMRC finds out about it, they could decide it is a sham, but it is going to be painful for the client.

If the contractors are asking you to do it, it isn't a sham. They've found someone who can substitute for them that the client will accept. A guy decides to take a week off and gets a substitute in. He contacts you, you sign a contract with him, he pays you, how is that a sham?

The only thing that is a sham in that case is IR35 itself. It's making people behave in ways they wouldn't ordinarily behave, maybe.

But in any event, the people carrying out any sham will be the contractors or the client. You are just doing work that someone contacted you to do. It isn't your job to divine what their intent is or to do HMRC's job for them. No one can blame you for taking a one week contract to sub in for somebody going on holiday. And it would be pretty hard to make the case, if you are doing that, that either they or you are under IR35.

If HMRC investigates, and they don't like what is happening, they might decide to investigate your past contracts. If they should have been IR35 and you didn't operate it, you might be at risk then. But they probably won't ever investigate the situation.

This is going to be a situation where the client uses the ESS tool, says there is a right of substitution, and so passes the contractors as being outside IR35. Obviously the client is willing to work with the contractors to keep them outside. In that case, HMRC is going to be looking for other targets. It's going to be expensive and gain little for them to try and fight it when both the contractor and the client say it is outside and the tool agreed.

I'd be looking for another regular contract. But in the interim, I don't see any risk to substituting in occasionally for contractors. I'd make them pay a premium, though. You are helping them out, a lot, without any locked in regular contract. It's at a price for you, risking having a lot of down time. And it is saving them a lot of money on taxes. I'd be looking for at least a 10% premium for that kind of short term work.

So they get you in and the PS client will tell YOU that you're inside IR35 - what the contractors are doing is throwing you under the bus and hope that they can slip away into the shadows without the retrospective angle hanging over them.

Smart thinking on their part...

For one or two days that I have to take off anyway and also at a premium to my current rate then me being caught by ir35 shouldn't be an issue surely? Also will only be done prior to april