Employment Status for Tax and NICs - Special Commissioner allows an appeal against an HMRC determination

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The Special Commissioner, in a decision given on 5 March 2007 in the case Parade Park Hotel & Anor v Revenue & Customs, has ruled against an HMRC determination that Mr. May was an employee for PAYE tax and NICs purposes and that the hotel for which he did maintenance work had a liability in respect of Mr. May's earnings of £7,188.

The decision is lengthy and, in allowing the appeal, the Special Commissioner refers to the unusual, if not unique, circumstances of the case. One of the particularly unusual features of the case is that Mr. May had a drinking problem that meant he often did not come to work, a situation of which the hotel owner was endlessly tolerant.

The Special Commissioner's decision is well worthy of study by anyone wishing to understand more clearly the many different factors that may need to be considered in evaluating employment status. In particular, the decision considers such issues as:

• taking into consideration all of the different aspects of the working relationship
  
  
• that some factors, such as who provides materials and the absence of employment benefits, may be significant in some working relationships but neutral in others
  
  
• the amount of work that a worker might perform for other clients
  
  
• the meaning of "mutuality of obligation" and how this principle can apply to both a long-term contractual relationship and to each short-term task performed
  
  
• the extent to which there has to be control over the work performed and what constitutes an "irreducible minimum" level of control for a master/servant relationship to exist
  
  
• the need to consider mutuality of obligation and control first, before considering other factors
  
  
• the factors that indicate whether or not a person is in business on his own account
  
  
• the relevance of the length of the working relationship.

...UK Payroll News - Latest

Source:
Parade Park Hotel & Anor v Revenue & Customs

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