The right of substitution is one of the key status tests that HMRC would look for during an IR35 investigation. It is therefore important that for all contractors who wish to operate outside of IR35, a genuine right of substitution exists throughout the duration of their engagement. Contractors must be able to demonstrate that their end client does not need them to personally deliver the services, and that any individual with the relevant level of skills, qualifications, and experience would be able to deliver the services successfully.
What must be remembered is that these are business-to-business agreements. Therefore, a contractor’s limited company should have the right to provide any suitably skilled and qualified individual(s) to deliver the service in their place. If the client asks for a certain contractor to personally provide the services and will not accept for the services to be delivered by another qualified individual, this would diminish the purpose of the client engaging the limited company from the start, but rather the individual; HMRC could argue at this point that the individual is better off being employed directly by the client and should be taxed in the same way as an employee.