Is an Employment Tribunal binding over HMRC?

[Jolie]

Following the ruling in Elbourn v The Met Office, and analysis from CUK and elsewhere, I want to explore the options open to us and how this impacts the ClientCo SDS, especially when there's clearly been no effort to determine the correct status for individual contractors.

Of course there are many variables and differences between all of our situations, but using any example where the MyCo vs Pimp contract has good SDC and MOO, and this can be used at the ET/EAT to confirm non-employment, is this binding over HMRC?

You work for your ClientCo for x number of years, then get forced inside after April 5th. You continue working and then lodge a case claiming employment rights. ClientCo and Pimp get the case dismissed on the basis you are not an employee of either. ET rules that because of SDC and/or MOO that you are self employed.

HMRC comes in and says you were inside all along, so pay up, but ET says you weren't.

Would the ET findings be valid for all the previous years? (I am working on the basis that the length of time is not an indicator to IR35, given that SDC and/or MOO are in play) Would the ET findings relating to s.230 of the Employment Rights Act 1996 be an overriding factor to IR35?

[Lance]

you could lose your ET and be found to not be employed, but still be inside IR35.
IR35 grants no employment rights, it's just a vague measure of disguised emplyoment.

I for one would be very nervous if I tried to argue that I was an employee, and by implication under MOO/SDC, with no RoS, and then had to argue that I was not only not an employee but also that those three things are the opposite to what I said previously.

All things in courts are a matter of public record. Your evidence in one case is damning evidence for the other.
How would you cope when your own evidence in a previous trial was read back to you, and against you?

[ladymuck]

Employment for benefits purposes are not linked to employment for taxation purposes.

This is generally because benefits are funded by the employer, not the taxes you pay.

However, that doesn't mean there isn't a gross imbalance going on.

[Jolie]

you could lose your ET and be found to not be employed, but still be inside IR35.

I understand your logic, and that is the crux of my argument, but the analysis says different:

Is Mutuality of Obligation no longer relevant for IR35?


That's why I wanted to try and pick this open and go over the reasoning behind why they believe this means the contractor was not subject to IR35.

[Lance]

I understand your logic, and that is the crux of my argument, but the analysis says different:

Is Mutuality of Obligation no longer relevant for IR35?


That's why I wanted to try and pick this open and go over the reasoning behind why they believe this means the contractor was not subject to IR35.

Interesting to note that he took them to an ET to get employers NICs back. And he lost due to being self employed.
Of course if he’d used an umbrella rather than his LTD, this would have worked differently I suspect. As he would have an employment contract with the umbrella.
This may well be one of the reasons why the big boys are just binning PSCs.

[Lance]

I understand your logic, and that is the crux of my argument, but the analysis says different:

Is Mutuality of Obligation no longer relevant for IR35?


That's why I wanted to try and pick this open and go over the reasoning behind why they believe this means the contractor was not subject to IR35.

And the original question was whether ET is binding over HMRC. I still think not. The contractor won back the tax deducted from the client/agency. HMRC were not involved.

[BolshieBastard]

Following the ruling in Elbourn v The Met Office, and analysis from CUK and elsewhere, I want to explore the options open to us and how this impacts the ClientCo SDS, especially when there's clearly been no effort to determine the correct status for individual contractors.

Of course there are many variables and differences between all of our situations, but using any example where the MyCo vs Pimp contract has good SDC and MOO, and this can be used at the ET/EAT to confirm non-employment, is this binding over HMRC?

You work for your ClientCo for x number of years, then get forced inside after April 5th. You continue working and then lodge a case claiming employment rights. ClientCo and Pimp get the case dismissed on the basis you are not an employee of either. ET rules that because of SDC and/or MOO that you are self employed.

HMRC comes in and says you were inside all along, so pay up, but ET says you weren't.

Would the ET findings be valid for all the previous years? (I am working on the basis that the length of time is not an indicator to IR35, given that SDC and/or MOO are in play) Would the ET findings relating to s.230 of the Employment Rights Act 1996 be an overriding factor to IR35?

To answer your question, no, an ET decision would not be binding on HMRC unless the particular employment dispute involved HMRC directly ie, they were the party the appellant had the dispute with.

[Jolie]

Interesting to note that he took them to an ET to get employers NICs back. And he lost due to being self employed.
Of course if he’d used an umbrella rather than his LTD, this would have worked differently I suspect. As he would have an employment contract with the umbrella.

That was my thought too. It would seem they withdrew the other part of their case based on the likelihood that they were going to lose and would be better off losing.

It will be for time to tell if we see a case involving an umbrella and how that works.

This may well be one of the reasons why the big boys are just binning PSCs.

Indeed, they have seen the error. But it also goes to show that those clients not up to speed with the legislation are making a complete mess of the SDS's and opening themselves up to further risk.

[Jolie]

And the original question was whether ET is binding over HMRC. I still think not. The contractor won back the tax deducted from the client/agency. HMRC were not involved.

Agreed. I think it's going to take a test case to the high court to sort this mess out.

What I would like to know is who is liable in this instance. ET says you are not employed, engager must pay back PAYE and NIC's.

Do they have to pay that out of their own pocket, or can they claim that back from HMRC? (and thus HMRC then becomes involved.)

[JohntheBike]

[QUOTE=Lance;2727281]you could lose your ET and be found to not be employed, but still be inside IR35.
IR35 grants no employment rights, it's just a vague measure of disguised emplyoment.

I for one would be very nervous if I tried to argue that I was an employee, and by implication under MOO/SDC, with no RoS, and then had to argue that I was not only not an employee but also that those three things are the opposite to what I said previously.

All things in courts are a matter of public record. Your evidence in one case is damning evidence for the other.
How would you cope when your own evidence in a previous trial was read back to you, and against you?[/QUOTE

you could lose your ET and be found to not be employed, but still be inside IR35.

extremely unlikely in my opinion. HMRC is unlikely to challenge anyone who has had an ET judgement, as I have already proven. They could try taking a case to the FTT, but they couldn't risk it as they would want to avoid the two courts disagreeing with one another. But as I've said many times here, if anyone can show what aspects the FTT looks at to determine "taxed for employee purposes" that the ET doesn't look at for "employment purposes", and vice versa, then perhaps you might go some way to convincing the audience.

To date, there have been no such cases that I'm aware of.