Plumber wins employment rights

[barrydidit]

So I don't think he was Limited Company

"Mr Smith accepted that whilst working with PP he believed the arrangement was
that he was self-employed. He was registered with the Construction Industry
Scheme. He engaged an accountant to prepare income and expenditure accounts
throughout the period of his relationship with PP. He filed tax returns on the basis
that he was self-employed. He was registered for VAT and presented monthly
invoices to PP for VAT."


So probably not a complete gibbon then. But potentially huge ramifications for other CIS workers.

Yeah (section 44), so either wonky R4 reporting, or I wasn't listening properly

[chopper]

It does also seem to reinforce the notion that as far as the three main pillars of employment status are concerned, all three need to be shown to make the case for employment. In this case there looks like there was a degree of control, possibly not much direction in how he actually did the job, no RoS but it looks like MOO was the ultimate deciding factor that he was self employed.

"Mr Smith could reject particular jobs taking into account, for example, the nature of the
job and how far he would have to travel. He could also make a decision about when
to go home on a working day. He decided his own working hours. Mr Smith
agreed that PP had no obligation to provide him with work on any particular day
and, if there was not enough work, PP would not have to provide him with work and
he would not be paid. "

"In relation to a particular plumbing job Mr Smith could exercise his discretion in
relation to the work needed for a customer and whether to negotiate on price. He
was unsupervised in relation to the plumbing work itself. "

"He decided when he would do a job and how it would be done. "

Plus a load of stuff about how if the end client pays one month late, he only gets half of his cut. If client pays six months late then he gets nowt. Stuff about his own insurance, and having to remediate errors in his own time at his own cost...

[TheCyclingProgrammer]

HMRC will be licking their lips

He paid his wife £4,680 per year for minimal secretarial duties and also claimed a sum of £520 per year to reflect the use of a room in his home as his office. He also set off sums for accountancy charges, insurance, telephone and internet, tools and equipment hire and motor vehicle expenses. Against receipts of £130,753 Mr Smith set off expenses totalling £82,454.

Expenses seem high, though I doubt HMRC would challenge the wife's salary so long as she was actually doing something and the £520/year for use of a room in his home doesn't seem excessive either (remember self employed actually have a bit more flexibility when calculating use of home costs as they can apportion some of their fixed costs, not just additional costs).

I can only imagine the bulk of his costs were equipment and vehicle expenses. If he's an electrician, some of their tests equipment can be pricey.

Still, it wouldn't surprise me if HMRC wanted a closer look.

[vetran]

Expenses seem high, though I doubt HMRC would challenge the wife's salary so long as she was actually doing something and the £520/year for use of a room in his home doesn't seem excessive either (remember self employed actually have a bit more flexibility when calculating use of home costs as they can apportion some of their fixed costs, not just additional costs).

I can only imagine the bulk of his costs were equipment and vehicle expenses. If he's an electrician, some of their tests equipment can be pricey.

Still, it wouldn't surprise me if HMRC wanted a closer look.

yes Self Employed have very generous treatment on expenses. Surprised PP didn't demand Ltd.

The usage of Self Employed or Ltd Contractors needs attention. I think making the client responsible for some penalty if the engagement is exclusive over 40% of a 48 hour working week average over a quarter and 2 quarters , the contractor company is 1 person (or stricter for small services only formations)then the Client is the employer.

Many companies use self employed workers to avoid employment workers.

[chopper]

Still, it wouldn't surprise me if HMRC wanted a closer look.

It looks like this all happened more than six years ago anyway. So the HMRC might not be able to look that far back?

[TheCyclingProgrammer]

It looks like this all happened more than six years ago anyway. So the HMRC might not be able to look that far back?

Up to 6 years for careless behaviour, up to 20 years for deliberate behaviour.

[vetran]

"Mr Smith could reject particular jobs taking into account, for example, the nature of the
job and how far he would have to travel. He could also make a decision about when
to go home on a working day. He decided his own working hours. Mr Smith
agreed that PP had no obligation to provide him with work on any particular day
and, if there was not enough work, PP would not have to provide him with work and
he would not be paid. "

"In relation to a particular plumbing job Mr Smith could exercise his discretion in
relation to the work needed for a customer and whether to negotiate on price. He
was unsupervised in relation to the plumbing work itself. "

"He decided when he would do a job and how it would be done. "

Plus a load of stuff about how if the end client pays one month late, he only gets half of his cut. If client pays six months late then he gets nowt. Stuff about his own insurance, and having to remediate errors in his own time at his own cost...

And the reality of the arrangement is if he didn't do as told he would be sacked.

I'm sure he got shafted on the payments as suggested.

If HMRC can ignore the contract so can the Employment laws.

[Maslins]

On the self employed vs Ltd Co bit, I've reluctantly accepted over the years that many people, including those who should know better, use the phrase "self employed" to mean anyone who doesn't have a full time PAYE job. Eg most common one being tenancy/mortgage references, agents/lenders attitude is simply one of "do I get your income from 3 payslips, or your SA302, if the latter, you're self employed". My point being just because even some official places are referring to this person as self employed, I wouldn't assume that means he is a sole trader.

On a personal level the result of this case makes me feel sad. I agree with one of TCP's comments earlier, that this guys wants to have his cake and eat it. I'm sure both parties knew full well they were agreeing to it being self employed, and both enjoyed the perks of that for years. Then one of them had a change in personal circumstances, and suddenly wants the whole contract seen in a different light. To my mind being complicit with it being customer/suppler for years should outweigh possible dodgy wording of a contract, or indeed working practices. Certainly I'd be gutted if I had a similar deal with someone that worked well for both of us, then years later they decided they wanted it treated differently.

[Mordac]

HMRC will be licking their lips

He paid his wife £4,680 per year for minimal secretarial duties and also claimed a sum of £520 per year to reflect the use of a room in his home as his office. He also set off sums for accountancy charges, insurance, telephone and internet, tools and equipment hire and motor vehicle expenses. Against receipts of £130,753 Mr Smith set off expenses totalling £82,454.

Poor bloke. Hector is going to tear him a new rectum. Talk about a Pyrrhic victory...

[WordIsBond]

Up to 6 years for careless behaviour, up to 20 years for deliberate behaviour.

Pretty high threshold to prove deliberate behaviour. I think you'd have to prove he knew about IR35 and knew he should be operating it. That might not be easy to prove.