IR35 and right if substitution

[Marmitelover55]

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]

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]

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]

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]

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]

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]

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

[shawly]

I used QDOS aka QA Accounting and they were the worst accountants I ever had. The accounting work is not done by the person you interface with but outsourced and if you use them, your VAT will be done by a different accountant to your corporation tax, to your PAYE and if one of them makes a mistake and you spot it, it won't necessarily get corrected across the team. I didn't even know there was a team until I found a huge mistake myself.