Right of Substitution as an IR35 Factor
Contractors need to take note of the right of substitution as an IR35 Factor.
It is one of the three major IR35 Factors, along with Mutuality of Obligation and Control, Direction and Supervision.
To show that they are outside IR35, contractors need to name a substitute for themselves in their contract with the client or agency.
Supposedly, that person will substitute for the contractor if they are off for an extended period of time.
HMRC Can’t Prove Substitute Won’t be Used
In practice, the client company are extremely unlikley to allow that substitute to be used.
However, a court ruled that if there is a substitute in the contract, HMRC can’t prove that the substitute would not have ben used.
See our article Why Right of Substitution is crazy as a Major IR35 Factor[caption id="attachment_810" align="alignnone" width="275"] Right of Substitution as an IR35 Factor for Contractors[/caption]