IR35 and right if substitution

(7 Posts)
Marmitelover55 Tue 15-Mar-16 16:05:47

My DH has just secured his first IT contract. Looking at the agency contract though, it doesn't look that great from an IR35 point of view, so he has decided to use an umbrella company for this first contract.

He is keen though to invoice through his own limited company for future contracts. I understand the right of substitution to be very important, but am not sure how he can actually find a possible substitute as he doesn't know any other contractors with similar skills. Does anyone have any suggestions please? Many thanks.

SecretSpy Tue 15-Mar-16 16:09:27

My understanding is that the principle of being genuinely self employed means that he could in theory send a substitute, not that he can actually find a suitable one . Disclaimer - I'm not SE

Marmitelover55 Tue 15-Mar-16 16:35:17

I thought that too until I spoke to a specialist contractor accountant yesterday and it was his suggestion to actually find a substitute. We are not planning to use him though (expensive), so I can't ask him for suggestions!

Marmitelover55 Tue 15-Mar-16 16:56:38

Just had a thought - would he be able to go to an agency to find a substitute? Similarly to how the client has gone to an agency to find him/his company?

Badbadbunny Thu 17-Mar-16 11:38:21

I'm a practising accountant and have a few dozen contractor clients. From my experiences of HMRC, they're more concerned with checking that the end client would accept a substitute rather than whether the contractor could find someone suitable. HMRC tend to ignore the written contract and actually go direct and ask the end client if they'd accept a substitute. Yes, in theory, if the client would accept a substitute, then it's fine if the contractor could get an agency to provide one - I've never come across a tax inspector insisting that the contractor already knew someone available to attend in their place. The thing is, though, that IR35 cases are fluid, in that court cases come along and place different importance on different aspects, so the situation is constantly changing each year, so what is "current thinking" today could be very different in a years' time.

Badbadbunny Thu 17-Mar-16 11:40:02

You may think it's worth engaging a IR35 contract specialist to review the contract and give their opinions. We tend to refer our clients to QDOS who do a contract & working practices review for around £100. We've found they give very good advice and support and being specialists, they're dealing with IR35 every day and know the current thinking of ongoing investigations and court cases.

Marmitelover55 Thu 17-Mar-16 19:57:13

Thank you very much Badbadbunny - I will take you up on your advice re contract review smile

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