What do you need to include in your statement telling somebody their IR35 status has changed or applies?

Posted in : Seamus Says - Employment Law Discussion on 8 January 2021
Seamus McGranaghan
O'Reilly Stewart Solicitors
Issues covered: IR35

What do you need to include in your statement telling somebody their IR35 status has changed or applies? Is there any kind of template?

Seamus: I haven't come across any templates as yet. It's just not something that I've had to deal with. But I would imagine that there are templates out there in relation to that. Just to make you aware, there is a difference between . . . if your contract is deemed inside IR35, you're considered as an employee potentially for tax reasons. But that doesn't necessarily mean that you enjoy employee status, just to make that point clear. Ultimately, that is a question for the tribunal and for the tribunal to decide in relation to employment rights.

Just because you are deemed to have fallen within IR35 does not mean that you're an employee, or that a contract of employment should be issued, or anything like that. In some cases, it may well do, but I suppose the warning there is just don't jump the gun and think that you are automatically having to give employment rights to someone just because they simply fall within IR35.

What I would say about that is that there should be good consultation with any contractor in that sense, and make it clear why you've arrived at that decision and give them the reasons for it so that there is an understanding that you are going to make those deductions from any payment.

Scott: I'm just getting everything in here. "HMRC have an online assessment tool that can be completely downloaded and saved. I've used this to send to the individual with a covering email." So thank you very much for whoever sent that one in. So there is something on HMRC if you want to have look.

Now, I presume it's similar to the list they used to have when you were trying to check it out whether somebody is self-employed or a worker, an employee, the lists that were there, Seamus. And I suppose that would be the justification, you're saying. Do we control how you do work? Do you use your own tools? All those kinds of questions that are in that list that was on HMRC. Presumably, that's been kind of updated there and that's what the listener is referring to.

Seamus: Yeah, as I say, I haven't come across it myself. But those are all the usual standard things that a tribunal will look at. I did cover areas in relation to the sort of employment rights, employment status at the Annual Review.

There are a number of cracking cases that are set out within that domain specifically. There's one trans call, which is an interesting case. It's more so about employment status, but it does cover off on IR35 implications. And you can see how both touch on a number of the same issues.

There's another one, Gorman v. Terence Paul, Manchester Ltd., which was just a decision that was issued in June 2020. Trans call case was February 2020. So these are fairly fresh and new cases. And issues such as substitution and all those sorts of things are always considered by the tribunal.

I mean, just to touch on a couple of them within the Gorman case, those things that . . . this was a hairdresser case, and they were saying if the claimant didn't provide hairdressing services herself personally, she didn't get paid, that she wore a uniform, that she was given clients, she had no control over it. And one of the big issues in that case was that there was no right of substitution, so the employee couldn't send someone in to do her job. Rather than going into work herself, she had to be there.

And in actual fact, there was an expectation from not only the employer, but also from the clientele, that it would be this specific person that would be doing the work themselves.

So it's an interesting case if anybody wants to have a look at it. If you need the reference on it, just get in contact with me or with Legal-Island. But it's a great case for setting out exactly the issues in and around that sort of mutuality of obligation, I think.



This article is correct at 08/01/2021

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Seamus McGranaghan
O'Reilly Stewart Solicitors

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