We regularly visit clubs where they are relying on substitution as the way in which their coach is truly self-employed with them, but where the coach has never actually substituted.
It is important to note that a coach who has never actually substituted may not actually pass HMRC scrutiny for self-employment status – HMRC would expect to see evidence that the coach HAS substituted in the past and that subsequent payment to the substitute coach was made by the coach and not the client (club).
Clubs should also be aware that HMRC are likely to know if a club has cancelled sessions because their coach could not attend. If they do have such evidence (website announcement, email to members, newsletter article, etc.) and the coach has never substituted at any other time, the club are likely to discover that their coach does NOT qualify as self-employed and is therefore an employee of the club, resulting in back tax and penalties.
It is therefore vital that there IS evidence of substitution when relying on this and clubs should note the following best practice:
- There should be three contract clauses in the contract between club and coach relating to substitution – obligation to substitute, the right to substitute, and a requirement for payment to be made by the coach to the substitute
- Clubs should ensure that there IS actual substitution during the year (we recommend at least three to four occasions in a calendar year)
- The invoice from the coach must state the name of the substitute and the hours worked
- Payment to the substitute must only be made by the original contracted coach
- The rate paid for the substituted hours must be the normal contract rate for the coach and NOT the rate normally changed by the substitute
- The club must still pay the usual rate to the coach where the substitute coach is a volunteer
Contact us if you need further clarification or visit our support centre for further free expert online advice and support.