We are all used to HMRC seeking to argue that some contractors are really disguised employees and attempting to apply the IR35 legislation, even if that means attempting to convince a Tribunal or Court judge that they are right.
On rare occasions however, the Revenue do go the extra mile to confirm a person’s self-employed status. This article examines a recent case, in the North East of England, where this actually happened.
This year, Mr Paul Anthony Bell, lost his appeal at Tribunal to have his employment status overturned from self-employed to employed. Mr Bell was engaged as a sub-contract bricklayer by Marshall Errock Construction Ltd (MEC) from March/April 2005 – 16th June 2005, when he was dismissed. The main contractor for the site on which Mr Bell worked, however, was Quarmby Construction Co. Ltd (QCC).
On 13th June 2005, Mr Bell had an accident at work and made a civil claim against QCC and Crossways Scaffolding (Elland) Ltd which was settled in his favour in 2008.
On 23rd October 2007, Mr Bell made a claim to the Department for Works and Pensions (DWP) for Industrial Injuries Disablement Benefit, citing on the claim form that he was employed by MEC. DWP, however, rejected the claim after being informed by MEC that they held no record of the accident. The decision was appealed by the claimant and DWP subsequently asked HMRC for a decision on Mr Bell’s employment status.
On 10th April 2008, HMRC met with Mr Bell to discuss his engagement with MEC. As a self-employed subcontrator working within the construction industry, it would have been necessary for Mr Bell to hold a CIS4 which he did, although he maintained that he always considered himself to be an employee. Mr Bell informed HMRC that he had asked if he could work under PAYE but had been told that it was self-employed or nothing. He therefore went ahead and signed a contract for services. HMRC was also told that:
•   He was mainly correcting other bricklayers’ mistakes most of the time. Each day he was told by the site manager what work he wanted him to do and would then be left to get on with that work. From time to time, the site manager would carry out checks and would move him from job to job. Although the site manager could ask him to redo something this had never happened. The surveyor would also check the work on a weekly basis.
•   He worked set hours from 08:00 – 16:30, 5 days per week, with occasional Saturday mornings.
•   Mr Bell was required to do the work personally and had no right of substitution. If he was absent from work due to illness or holiday he would not get paid.
•   He was paid piece work at an amount per 1,000 bricks, with a fall back rate of £15 per hour.
Although HMRC accepted there was some evidence of some control by the site manager, that person was engaged by QCC, the site contractor, and there was no evidence of sufficient control by MEC to conclude that Mr Bell was an employee of theirs.
Mr Bell engaged a firm of solicitors, Hadaway & Hadaway, to issue written submissions who, incidentally, take on personal injury claims on a no win no fee basis. Included in those submissions was the following additional information:
•   Mr Bell received regular training relating to health and safety issues from MEC.
•   Mr Bell did not invoice MEC and would receive weekly payment accompanied by a payslip showing pay and CIS tax deducted.
•   Mr Bell had no financial risk and had no opportunity to profit.
The Tribunal found that Mr Bell was self-employed as there was insufficient control being exerted on him to make him an employee of MEC. Although it is necessary for the main contractor to have overall control of the work being done, provided the work is done to specification, they exercise no other control over the manner in which it is done. The fact that the site foreman told workers what to do did not amount to control by MEC.
For health and safety reasons, the Tribunal considered it was sensible for MEC to specify the times of work and did not demonstrate the sort of control necessary to make Mr Bell an employee.
Whilst it was open to MEC to request that the contractor move to a different part of the site, Mr Bell had the right to refuse to accept the change and therefore MEC was not in a position to dictate what work needed to be done.
Although MEC supervised the quality of the work, the contractor used his skill to ensure that that quality was maintained. This did not amount to control of the way in which the contractor’s carried out their task.
Rules of general application to everyone, in whatever capacity they were present on QCC’s site could not be considered as control and were of no assistance in assessing whether MEC had control over the way in which contractor’s did their work and the Tribunal found that MEC did not exercise control over this element of the contractors’ work.
QCC provided both the power tools and materials for the work to be carried out to specification. There was no scope for either MEC or the contractor to make any decision in the means to be employed in carrying out the work and therefore this element of the control condition was not met.
This case was similar in its motive to that of Brett Convery who, last year, also sought to establish that he was employed within the construction industry in order that he too could claim Industrial Injuries Disablement Benefit following his fall from a roof. Again this appeal was heard in the North East. Something in the water perhaps?
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