Reply to: Plumber wins employment rights

[centurian]

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.

WHS

For the bike courier types in the gig economy. I completely agree and support their court cases. They are not contractors or freelancers. They don't get paid a premium for the lack of employment benefits, but are subject to similar restrictions. They situation isn't close to ours, so I have always been fairly relaxed about these judgements.

This guy is the closest we have seen so far to a "real" contractor suing for employment rights. He was paid a hefty premium in lieu of the employment benefits.

[SueEllen]

That "business" could equally be the plumber's Ltd Co. Which do you think they'll actually go after, the gobby litigation-happy multi-millionaire, or the bloke who's been using a Ltd for the purposes of paying as little tax as possible, and has just admitted in court that he was really an employee all along? Factor in all the other Pimlico Plumbers in the same situation, and Hector will be shooting fish in a barrel for months.

The gobby one to use as an example. The mistake he's made is not being a billionaire.

[Jessica@WhiteFieldTax]

The judgement did include excerpts from his contract which has stuff about him having to indemnify PP against tax claims, so if Hector came sniffing, then Pimlico Plumbers could try and sue the daft chap.

If he has employment rights, then it's a strong possibility that clause won't be enforceable.

[chopper]

What LtdCo?

The judgement made no mention of him using a Limited Company. It did make mention of him using the Construction Industry Scheme which I believe doesn't preclude a limited company, but I would suggest most likely he was not using a Limited Company.

The judgement did include excerpts from his contract which has stuff about him having to indemnify PP against tax claims, so if Hector came sniffing, then Pimlico Plumbers could try and sue the daft chap.

He should be stocking up on lube.

[pr1]

That "business" could equally be the plumber's Ltd Co. Which do you think they'll actually go after, the gobby litigation-happy multi-millionaire, or the bloke who's been using a Ltd for the purposes of paying as little tax as possible, and has just admitted in court that he was really an employee all along? Factor in all the other Pimlico Plumbers in the same situation, and Hector will be shooting fish in a barrel for months.

What LtdCo?

[Mordac]

Wrong hopefully Pimlico Plumbers will get a visit.

Employers using ‘bogus self-employment’ to face heavy penalties - People Management Magazine Online

If HMRC determines that a contractor is actually an employee in disguise, it will pursue the business to recover historic and current PAYE deductions and may impose a hefty fine. The tax affairs of the business may also subsequently come under closer scrutiny.

That "business" could equally be the plumber's Ltd Co. Which do you think they'll actually go after, the gobby litigation-happy multi-millionaire, or the bloke who's been using a Ltd for the purposes of paying as little tax as possible, and has just admitted in court that he was really an employee all along? Factor in all the other Pimlico Plumbers in the same situation, and Hector will be shooting fish in a barrel for months.

[TheCyclingProgrammer]

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.

Again, it seems he was actually self-employed so this wasn't in relation to IR35, but the level of expenses claimed against his income, which pr1 was implying seemed high (and I agree).

It might start off with an investigation into his most recent return and if there is evidence of deliberately claiming expenses that were not wholly and exclusively for business purposes, it could lead to investigations going further back.

As I said, there could be genuine reasons why he had such a high level of expenditure but it does strike me as particularly excessive. Perhaps it was just a single year in which he bought a lot of equipment and claimed capital allowances.

I guess the point here is if you're going to expose yourself to HMRC in such a high profile way, you'd better hope your own accounts are squeaky clean.

[northernladuk]

The way cases like these are shaping up recently, what are the chances we see a contractor who is deemed inside IR35 suing a company for holiday/sick pay?

I think there is a difference between employment law and tax law so not sure that will work on it's own. I thought just because you are inside IR35 it doesn't make you an employee. That's a slightly different argument. That said as per the O'Murphy case it wouldn't be hard to then argue you are an employee to get it covered.

[WordIsBond]

The way cases like these are shaping up recently, what are the chances we see a contractor who is deemed inside IR35 suing a company for holiday/sick pay?

It will happen.

Some PS contractor is going to be told by his engager he is inside IR35. HMRC will then investigate his past contracts with them with the presumption that he was inside IR35, and he'll lose the case. He'll sue for holiday/sick pay, saying if the client deems him to have been a hidden employee, then they should provide employment benefits accordingly. And he'll win. And H.M. Treasury will be worse off in the long run. But they'll have been "fairer."

[vetran]

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

Wrong hopefully Pimlico Plumbers will get a visit.

Employers using ‘bogus self-employment’ to face heavy penalties - People Management Magazine Online

If HMRC determines that a contractor is actually an employee in disguise, it will pursue the business to recover historic and current PAYE deductions and may impose a hefty fine. The tax affairs of the business may also subsequently come under closer scrutiny.

[elpato]

The way cases like these are shaping up recently, what are the chances we see a contractor who is deemed inside IR35 suing a company for holiday/sick pay?

[northernladuk]

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.

Some contractors have tried this and most seem to win. They are in a cushy contract for 5+ years with a client, they get binned, claim for unfair dismisal and win because the court finds that he is employed. Utter nightmare for IR35 but the main one was before IR35 I believe. O'Murphy V Hewlett Packard it was.

There have been a number of smaller ones but not all relate to IT contractors. It appears if you want to argue you are an employee and therefor claim unfair dismissal you've got a very good chance of winning

[WordIsBond]

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.

This, a million times.

[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.

[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...