Graham Purvis from Robson Laidler LLP said “False self-employment occurs where workers are treated as self-employed for tax and National Insurance purposes, even though the way in which they work on a day-to-day basis demonstrates that there is an ‘employment relationship’
Currently, the tax legislation does not define employment or self-employment, and disputes are decided by the courts, based on the facts of each case and previous case law precedent, normally using three established definitions of employment:
• Mutuality of obligation – that an employer is obliged to provide work and an employee is obliged to perform it.
• Control – an employer can control how employees perform their work.
• Personal service – an employee works for an employer under a contract of personal service.
“HMRC has recently lost several tribunal and court cases, and plans to move away from the current case law approach, towards devising statutory criteria, which would define construction workers as employees for Tax and National Insurance (NI) purposes, but not for general or employment law purposes”.
The proposed legislation states that for a worker to be considered self-employed for tax or NI purposes, one or more of the following criteria must apply:
• Provision of plant and equipment (but not including general tools)
• Provision of all materials
• Provision of other workers
The government is mainly targeting the 300,000 or so labour-only subcontractors as it believes a large proportion of those are ‘working under employment terms’, costing the treasury up to £350million annually.
Notes to editors
For more information contact Graham Purvis of Robson Laidler LLP: Direct Line 0191 2818191, Email gpurvis@robson-
These comments are offered for publication on the understanding that our contact information is included.
The writer would appreciate details of the publication date if this article is released for publication.
