Contract substitution - Inside or Outside?

[northernladuk]

you moving on due to no lack of work has no bearing on MOO.
Them not having to provide work for you does have a bearing. All sounds good as not being any MOO.

But offering work on a day to day basis isn't part of MoO. This is part of the T&M work we do. MoO is about other work above and beyond the work you are obliged to do by the contract.

When you have completed the work in your SoW before the contract ends they don't have to give you and you don't have to accept new work. This is different to them saying take xmas off. That's under the obligations of the contract to do the job.

[Manic]

Interested to understand if they have defined "consultant" in the contract. If it means the Limited Company then assuming you employ the person doing the work (or is part of the same ltd) then you are not sub contracting.

I fear though that consultant means "Winger300" and the rest of the contract will have other gems to indicate it is you they are "employing".

[Lance]

MOO is a difficult one here. The client maybe doesn't need me working 100%. Legally there's no obligation to give work, but practically if they don't then I'll move to another client.

you moving on due to no lack of work has no bearing on MOO.
Them not having to provide work for you does have a bearing. All sounds good as not being any MOO.

[Winger300]

3. rely on lack of SDC and MOO for a true outside determination.

MOO is a difficult one here. The client maybe doesn't need me working 100%. Legally there's no obligation to give work, but practically if they don't then I'll move to another client.

[Lance]

So your options are:-

Assume the contract is inside IR35 and use an umbrella.
Get a review and see if the agency will change it
Pray HMRC doesn't come knocking at any point.

1 and 2 are sane approaches although 2 has some risk.

3. rely on lack of SDC and MOO for a true outside determination.

[Adam at 34square]

Here's the wording in my contract regarding substitution....

"The consultant shall not be entitled to retain sub-consultants for the performance of its undertakings persuant to the Agreement without written approval or replace personnel without written consent"

"The consultant shall be responsible for ensuring that its employees and other persons retained by the Consultant to perform the engagement possess the qualifications, authority and reliability required to fulfil the engagement. The client shall be entitled to take the measures that it deems necessary in order to ensure that the relevant persons fulfil such requirements"

"In the event the client considers that certain personnel or other persons retained by the consultant for the performance of the engagement are deficient as regards the requirements which may be reasonably imposed for the performance of the Engagement, the client shall be entitled to demand a replacement of such personnel or other persons by written notice to the consultant. The replacement shall occur as soon as possible under the circumstances, and no later than 10 business days following the client's demand"


The contact was arranged without any consideration for IR35, so it genuinely reflects the working agreement and isn't a sham-clause.

So in the CEST question about substition, can I honestly answer that the client cannot reject a substitute?

I have done a lot of testing in the CEST site to establish the main drivers of the determinations. Probably the wording above is vulnerable. But it is fine for clients to have the right to reject a candidate. I'm also hearing though, that just relying on a substitution clause in your contract, even a robust one, is not enough. You need to ensure your client acknowledges and is aligned with it - the full implications of it. You'll likely also need to be able to demonstrate you have the capability to implement a substitution. There are other measures you can take to defend your position, but the right of substitution seems to be HMRC's primary first shot across the bows. If you have actually had a substitute paid by you, that can apparently push you outside all on its own, so demonstrating the robust capability to do so is going to strengthen your position.

[Adam at 34square]

You have heard IR35 has been delayed for a year? Why on earth would you even bother with a CEST test? Get your contract reviewed professionally if your not penny pinching


Sent from my iPhone using Contractor UK Forum

The CEST site has been getting a lot of stick. Nevertheless, HMRC do state they will stand by determinations as long as the information provided can be proven to be accurate. Now that's pretty open I guess. But... I'm hearing that if you're going for paid for assessments, a large and possibly excessive percentage of them are resulting in 'Inside' determinations. I suspect they need to be absolutely 100% rock solid certain if they conclude outside... i.e. ANY doubt whatsoever and they'll push you inside.

Fact is, meeting the stipulations might not be childsplay, but neither is it astrophysics. A few minor steps can make a big difference.

The biggest risk in my view is lack of understanding from clients, risk aversion from clients and assessment service providers, and companies gradually moving away from outside IR35. We all need to work together to halt and reverse that trend.

[Scruff]

Working Practices will override the written contract. If the Client say "Er, no thanks we don't want him/her" then the clause is meaningless...It will not indicate a true contract of Supply.

Get the contract reviewed, Professionally, and then have the Working Practices reviewed, too.

[eek]

That's what I thought.

In the current climate though I'm reluctant to rock the boat asking for a change in the contract wording.

So your options are:-

Assume the contract is inside IR35 and use an umbrella.
Get a review and see if the agency will change it
Pray HMRC doesn't come knocking at any point.

1 and 2 are sane approaches although 2 has some risk.

[Winger300]

That's what I thought.

In the current climate though I'm reluctant to rock the boat asking for a change in the contract wording.

[northernladuk]

The client has the right to decline and control the process so yes they can refuse. The first paragraph makes that clear.

That clause isn't going to pass an IR35 inspection in a million years.

[GhostofTarbera]

Here's the wording in my contract regarding substitution....

"The consultant shall not be entitled to retain sub-consultants for the performance of its undertakings persuant to the Agreement without written approval or replace personnel without written consent"

"The consultant shall be responsible for ensuring that its employees and other persons retained by the Consultant to perform the engagement possess the qualifications, authority and reliability required to fulfil the engagement. The client shall be entitled to take the measures that it deems necessary in order to ensure that the relevant persons fulfil such requirements"

"In the event the client considers that certain personnel or other persons retained by the consultant for the performance of the engagement are deficient as regards the requirements which may be reasonably imposed for the performance of the Engagement, the client shall be entitled to demand a replacement of such personnel or other persons by written notice to the consultant. The replacement shall occur as soon as possible under the circumstances, and no later than 10 business days following the client's demand"


The contact was arranged without any consideration for IR35, so it genuinely reflects the working agreement and isn't a sham-clause.

So in the CEST question about substition, can I honestly answer that the client cannot reject a substitute?

You have heard IR35 has been delayed for a year? Why on earth would you even bother with a CEST test? Get your contract reviewed professionally if your not penny pinching


Sent from my iPhone using Contractor UK Forum

[Winger300]

Here's the wording in my contract regarding substitution....

"The consultant shall not be entitled to retain sub-consultants for the performance of its undertakings persuant to the Agreement without written approval or replace personnel without written consent"

"The consultant shall be responsible for ensuring that its employees and other persons retained by the Consultant to perform the engagement possess the qualifications, authority and reliability required to fulfil the engagement. The client shall be entitled to take the measures that it deems necessary in order to ensure that the relevant persons fulfil such requirements"

"In the event the client considers that certain personnel or other persons retained by the consultant for the performance of the engagement are deficient as regards the requirements which may be reasonably imposed for the performance of the Engagement, the client shall be entitled to demand a replacement of such personnel or other persons by written notice to the consultant. The replacement shall occur as soon as possible under the circumstances, and no later than 10 business days following the client's demand"


The contact was arranged without any consideration for IR35, so it genuinely reflects the working agreement and isn't a sham-clause.

So in the CEST question about substition, can I honestly answer that the client cannot reject a substitute?