No Taking Away of Status

Employment status issues at the Chinese takeaway

A recent First Tier Tax Tribunal ruled on the employment status of two people engaged by Yau Wing Liu, the proprietor of a Chinese takeaway in Grantham.

The issues came to light in July2012, when a joint HMRC/UKBA/police visit was made to Mr Liu’s premises. One illegal immigrant, Tian Qiang He, was detected, whom Mr Liu’s wife informed the HMRC officer had been working at the takeaway since April 2012. Mr He had replaced the previous chef, one “James”.

Inspection of the business’ end of year PAYE return, revealed that neither Mr He nor anyone called James were mentioned. Mr Liu’s representative explained that the reason for this was because both had been employed through an agency and therefore were not employees of the business, as it was the agency’s responsibility to deduct PAYE tax and NIC. However, Mr Liu could not remember the name of the agency and eventually accepted that Mr He was indeed his employee.

At the tribunal hearing Mr Liu then produced a form P46 (new starter) which he claimed to have found amongst his papers. He could not explain why he had such a form when he had previously claimed that Mr He had been employed via an agency. It was found that the document had not been completed in April 2012 and had not been sent to HMRC.

Having previously told HMRC that ‘James’ had been a chef, Mr Liu informed the Tribunal that he was a self-employed delivery driver and presented a witness statement running to two lines that stated, “I, James Kerr, of ……………(address), hereby confirm that I was never employed by Mr Yau Wing Liu of Wings Takeaway.”

According to Mr Liu, James Kerr delivered meals when called upon to do so for a flat fee of £1.50 per delivery which was paid to him in cash by the customer. Although he never refused to make a delivery, had he ever chosen to do so then Mr Liu would have delivered the meal himself.

Mr Kerr used his own vehicle to make the deliveries and met all the running costs.

Should he have chosen to do so Mr Kerr could have made arrangements for someone else to carry out a delivery rather than doing it himself.

Work was not guaranteed and neither was Mr Kerr’s work supervised.

Although Mr Liu’s evidence “was in some respects entirely unreliable”,  because the HMRC officer who took the original notes was not present at the hearing, the tribunal judge accepted that Mr Kerr was a casual delivery driver and therefore self-employed. This was supported by the fact that the worker had also had two other PAYE employments in the year ended 5th April 2012.

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