Very worrying - the expenses thing

[jamesbrown]

What Eek says but also it's not SDandC it's S or D or C OR the right thereof and it's the last bit that's the killer. In your chef example he may have been asked to cook a steak well done but the head chef as the RIGHT to throw a complete diva strop and tell him that a steak should only ever be cooked rare because otherwise you'll lose all the flavour

Again, you have to look at the case law, and I don't believe this view is supported by the case law. Control has always been about the right to exercise control and not necessarily the execution (e.g. all the way back to RM, with more recent examples including Marlen and Primary Path) and has always been judged in the round and not on the basis of some elements of control being present. The weight of evidence must point to the (right to exercise) a degree of control that is substantially the same as the right that exists under an employment relationship. The right has always been enough. Having only some (insubstantial in the round) elements of control has never been enough (subject to the above).

[Zero Liability]

HMG/HMRC's issue is with the number of workers who now get tax relief on T&S expenses; it was never the Government's intention that it should be applied to anything other than proper contractors. Problem is, rather than working a solution which would make a clear distinction, they are taking the sledgehammer to crack a nut approach.

One solution we came up with was to suggest that workers on, say, living wage +20% or less could not work through an intermediary and not be engaged on a zero hours contract - this would take large numbers of workers, who should never have been in this market in the first place, back into permieland and HMG's problems are solved. The thresholds would change automatically every year, it would be simple to police due to RTI and there would be no more arguments over employment status which, let's face it, is a losing battle.

Assuming that they then don't become too expensive to justify the hire. Although that is something the government could review separately, especially since it plans to review PAYE/NI anyway, which will factor in the costs to employers of the latter. Or
so one would hope.

[eek]

Again, you have to look at the case law, and I don't believe this view is supported by the case law. Control has always been about the right to exercise control and not necessarily the execution (e.g. all the way back to RM, with more recent examples including Marlen and Primary Path) and has always been judged in the round and not on the basis of some elements of control being present. The weight of evidence must point to the (right to exercise) a degree of control that is substantially the same as the right that exists under an employment relationship. The right has always been enough. Having only some (insubstantial in the round) elements of control has never been enough (subject to the above).

It may be worth reading the document. The phrasing is either particularly bad or intended for a particular purpose as its not HMRC's previous use of S,D or C...

And the entire point of this consultation to move away from the old are you employed / self employed rules to something far more restricted....

[LisaContractorUmbrella]

Again, you have to look at the case law, and I don't believe this view is supported by the case law. Control has always been about the right to exercise control and not necessarily the execution (e.g. all the way back to RM, with more recent examples including Marlen and Primary Path) and has always been judged in the round and not on the basis of some elements of control being present. The weight of evidence must point to the (right to exercise) a degree of control that is substantially the same as the right that exists under an employment relationship. The right has always been enough. Having only some (insubstantial in the round) elements of control has never been enough (subject to the above).

As Eek says this is not about using standard case law in which SDC would only be considered as one of a range of determining factors along with MOO and ROS typically. This is about HMRC selecting a single element and then asking the tax payer, as their defence for a claim for tax relief, to prove a negative which, as I am sure you know, in legal terms, is notoriously difficult. Probably the most commonly cited case by HMRC when discussing issues of employment status is Ready Mixed Concrete and yet their own guidance manual states:

"The worker has to be subject to a right of control. If there is no right of control of any kind then you will not have a contract of service. However, it was also made clear in the judgement that, although a right of control is an important factor in determining employment status, it is not necessarily a determining factor”

This premise is now being overturned completely to make SDC the ONLY determining factor.

You obviously have a good knowledge of the law so if you know of case(s) which determined status based on SDC only it would be really helpful in putting together our consultation response.

[expat]

What Eek says but also it's not SDandC it's S or D or C OR the right thereof and it's the last bit that's the killer. In your chef example he may have been asked to cook a steak well done but the head chef as the RIGHT to throw a complete diva strop and tell him that a steak should only ever be cooked rare because otherwise you'll lose all the flavour

Eek's point is quite right.

You make a separate point. The question of whether one is a disguised employee goes hand in hand with the question of whose employee one is. In your case the chef is an employee: an employee of the head chef or of the restaurant - but not an employee of the client.

If the chef is not employed by anyone else, then the mere fact that the client orders a medium rare steak does not make the chef an employee of the client.

[LisaContractorUmbrella]

Eek's point is quite right.

You make a separate point. The question of whether one is a disguised employee goes hand in hand with the question of whose employee one is. In your case the chef is an employee: an employee of the head chef or of the restaurant - but not an employee of the client.

If the chef is not employed by anyone else, then the mere fact that the client orders a medium rare steak does not make the chef an employee of the client.

Agreed but that's kind of the point I was making although obviously not very well And I was agreeing with Eek.

The consultation document says that the effect of the proposed changes will mean that anyone who 'looks and acts' like an employee won't be able to claim tax relief on T&S but SDC alone is not an appropriate test to determine employment status

[jamesbrown]

As Eek says this is not about using standard case law in which SDC would only be considered as one of a range of determining factors along with MOO and ROS typically. This is about HMRC selecting a single element and then asking the tax payer, as their defence for a claim for tax relief, to prove a negative which, as I am sure you know, in legal terms, is notoriously difficult. Probably the most commonly cited case by HMRC when discussing issues of employment status is Ready Mixed Concrete and yet their own guidance manual states:

"The worker has to be subject to a right of control. If there is no right of control of any kind then you will not have a contract of service. However, it was also made clear in the judgement that, although a right of control is an important factor in determining employment status, it is not necessarily a determining factor”

This premise is now being overturned completely to make SDC the ONLY determining factor.

You obviously have a good knowledge of the law so if you know of case(s) which determined status based on SDC only it would be really helpful in putting together our consultation response.

At the risk of repeating myself, changing the primacy of one or other of these factors does not change the case law surrounding these factors individually. Furthermore, the extensive case law on SDC supports a collective interpretation and one that is made by the judge in the round, not mechanically on the basis of one or two elements being present. From the case law on SDC we know that:

• The right to SDC is sufficient
• The degree of SDC is determinative (particularly w/r to how work is done), rather than simply the presence of one or more elements of the S or D or C.
• That SDC does not always apply in principle

I'm not sure how your comment about "proving a negative" arises at different stages of this process. For example, one outcome might be that a client needs to certify the absence of SDC; I think we can agree, this would be bad (and, unfortunately, I believe it's quite likely, but it's also a separate point, specifically about enforcement rather than case law). Another outcome might be that the PSC needs to self-certify the absence of SDC through the normal mechanisms, i.e. with reasonable care. In any case, when HMRC dispute the absence of SDC and this enters a legal process, the existing case law will apply. I think your comment about "proving a negative" was intended to apply here, in which case I disagree. Establishing the presence of SDC is the same as establishing the absence of SDC because a judgement will be made in the round about the degree of SDC.

With regard to whether a new emphasis on SDC is better or worse for us, I think that depends, but I also think that any attempts by HMG to steer this process, without a fundamental shift in the statutory underpinning (such as a clear test that could ultimately be circumvented), may not have the desired results. I note the third bullet above and quote from Morren vs. Swinton and Pendlebury Borough Council:

"'Clearly superintendence and control cannot be the decisive test when one is dealing with a professional man or a man of some particular skill and experience. Instances of that have been given in the form of a master of a ship, an engine driver or a professional architect, or as in this case, a consulting engineer. In such cases there can be no question of the employer telling him how to do work; therefore the absence of control and direction in that sense can be of little, if any, use as a test.'"

[eek]

Eek's point is quite right.

You make a separate point. The question of whether one is a disguised employee goes hand in hand with the question of whose employee one is. In your case the chef is an employee: an employee of the head chef or of the restaurant - but not an employee of the client.

If the chef is not employed by anyone else, then the mere fact that the client orders a medium rare steak does not make the chef an employee of the client.

Yep but my worry is that its a very slippy slop. If you work somewhere for a few hours its possibly easy to show no S or D or C. If you work at the same client for a year or more I reckon it would be a lot harder. Especially when the question won't be being asked in real time but potentially 3 or 4 years after the event.

[LisaContractorUmbrella]

At the risk of repeating myself, changing the primacy of one or other of these factors does not change the case law surrounding these factors individually. Furthermore, the extensive case law on SDC supports a collective interpretation and one that is made by the judge in the round, not mechanically on the basis of one or two elements being present. From the case law on SDC we know that:

• The right to SDC is sufficient
• The degree of SDC is determinative (particularly w/r to how work is done), rather than simply the presence of one or more elements of the S or D or C.
• That SDC does not always apply in principle

I'm not sure how your comment about "proving a negative" arises at different stages of this process. For example, one outcome might be that a client needs to certify the absence of SDC; I think we can agree, this would be bad (and, unfortunately, I believe it's quite likely, but it's also a separate point, specifically about enforcement rather than case law). Another outcome might be that the PSC needs to self-certify the absence of SDC through the normal mechanisms, i.e. with reasonable care. In any case, when HMRC dispute the absence of SDC and this enters a legal process, the existing case law will apply. I think your comment about "proving a negative" was intended to apply here, in which case I disagree. Establishing the presence of SDC is the same as establishing the absence of SDC because a judgement will be made in the round about the degree of SDC.

With regard to whether a new emphasis on SDC is better or worse for us, I think that depends, but I also think that any attempts by HMG to steer this process, without a fundamental shift in the statutory underpinning (such as a clear test that could ultimately be circumvented), may not have the desired results. I note the third bullet above and quote from Morren vs. Swinton and Pendlebury Borough Council:

"'Clearly superintendence and control cannot be the decisive test when one is dealing with a professional man or a man of some particular skill and experience. Instances of that have been given in the form of a master of a ship, an engine driver or a professional architect, or as in this case, a consulting engineer. In such cases there can be no question of the employer telling him how to do work; therefore the absence of control and direction in that sense can be of little, if any, use as a test.'"

That's exactly the point. HMRC ARE attempting to rely solely on this test and as the proposed changes will be integrated into ITEPA it will be in Statute I believe.

[expat]

Yep but my worry is that its a very slippy slop. If you work somewhere for a few hours its possibly easy to show no S or D or C. If you work at the same client for a year or more I reckon it would be a lot harder. Especially when the question won't be being asked in real time but potentially 3 or 4 years after the event.

I worked for 2 years at a HP site. Beside me an employee of Accenture worked for the same 2 years on the same project.

He was definitely not an employee of HP. Why should I be considered an employee of HP then? Is it that you are "safe" from being considered "employed" by the client only if you are employed by someone else instead?