The Potted Guide to IR35

[Cameron]

grrr... whenever anyone tries to simplify this issue someone else throws in doubt and uncertainty.

David you lost me at 'not unreasonably fettered right of substitution'!

[Malvolio]

My quoted version of the RoS clause was deliberately very simplistic. The client can refuse to accept your substitute, obviously. However they should only refuse on the grounds of technical ability and fitness for purpose - you can't really expect to be allowed to sub a team leader with someone with no team leading experience, for example - but not for other reasons. Putting that in to a contract is not a simple task.

For example, an extract ftom the PCG standard contract contains, in part

...but nevertheless [the service provider] reserves the right to substitute (and, if so required by the Client on reasonable grounds, will substitute) other personnel of equivalent expertise.

The Service Provider acknowledges that the Client has the right, under its contract with the Agency, to refuse to accept Services from any personnel on reasonable grounds related to security, qualifications or expertise....

In other words, if the sub is fully qualified and capable of doing the role, the client will need a very good reason not to accept them.

[David Harmer]

Sorry - go away for a few days and find you have many questions to answer...(should have kept my mouth shut?!)...

Yes the numbers I was going on were the cases to have been decided by the courts at Special Commissioners/High Court. I couldnt possibly be able to tell the number of wins prior to commissioners as these will vary from adviser to adviser and are very subjective (what consitutes a "win" is it simply "not caught" or is it a win in the eyes of a taxpayer which could mean negotiated settlement at a fraction of the cost or simply where the Revenue have pulled out but not actually agreed it is outside of IR35) - but yes for clarity's sake I was simply looking at actual judgements as these are the only confirmed figures around nowadays!

and with substitution - yes Mal is right - it is basically what reasons might a substitute not be allowed? The courts have accepted the following conditions as not overly restricting a right of substitution:

1. equivalent skills, qualifications etc
2. because the replacement is a known trouble maker
3. because no one eles will work with him

The courts look practically, while they accept an outright power to send anyone you want (your mother, son, person off the street) is a ridiculous state of affairs, allowing a client to simply say No to a replacement for any reason whatsoever is too restrictive!

[Malvolio]

Thanks, Dave, appreciate the clarification.

PCG have embarked on an exercise to get some feel for the total number of wins vs losses across the board as part of their ongoing debate about the fiscal justification for IR35. I agree this is a little quixotic, but even a close approximation would be valuable. Evidence form thier own membership - admittedly a biased and self-selecting sample - seems to indicate very few are being found to be caught.

[Vaseline]

Originally Posted by David Harmer

Sorry - go away for a few days and find you have many questions to answer...(should have kept my mouth shut?!)...

Yes the numbers I was going on were the cases to have been decided by the courts at Special Commissioners/High Court. I couldnt possibly be able to tell the number of wins prior to commissioners as these will vary from adviser to adviser and are very subjective (what consitutes a "win" is it simply "not caught" or is it a win in the eyes of a taxpayer which could mean negotiated settlement at a fraction of the cost or simply where the Revenue have pulled out but not actually agreed it is outside of IR35) - but yes for clarity's sake I was simply looking at actual judgements as these are the only confirmed figures around nowadays!

and with substitution - yes Mal is right - it is basically what reasons might a substitute not be allowed? The courts have accepted the following conditions as not overly restricting a right of substitution:

1. equivalent skills, qualifications etc
2. because the replacement is a known trouble maker
3. because no one eles will work with him

The courts look practically, while they accept an outright power to send anyone you want (your mother, son, person off the street) is a ridiculous state of affairs, allowing a client to simply say No to a replacement for any reason whatsoever is too restrictive!

this is great stuff. Thanks David

V

[wattaj]

Thanks for this clarification David.
Very much appreciated.

As you've pointed out, the cases that actually reached the Commissioners should be widely recognised by most interested freelancers. However, the following webpage might be of interest for those that are coming to the party a bit late.
:wink:

Egos IR35 Case Index

[Malvolio]

Originally Posted by wattaj

Thanks for this clarification David.
Very much appreciated.

As you've pointed out, the cases that actually reached the Commissioners should be widely recognised by most interested freelancers. However, the following webpage might be of interest for those that are coming to the party a bit late.
:wink:

Egos IR35 Case Index

Good point - forgot about that list. Worth noting, though, how many of the failures were ones where the contractor presented his own case. Professional representation is an absolute necessity with such a poorly constructed and ambiguous law.