Firm News

Employment status - significant court case!

A recent judgment handed down by the Supreme Court is perhaps the most important judgment with regards to employment status in recent history. The case of Autoclenz vs Belcher concerned Autoclenz engaging car valeting on a self employed basis.

Each worker had signed a contract which contained clauses which you would normally find in a self employed contract such as substitution and mutuality of obligation. However, the Supreme Court found that these clauses were not a true reflection of the agreement and that the relationship between the parties is what is important.

More importantly, the Supreme Court took into account the expectation between the parties and how much bargaining power the worker has. Whilst the reality of the situation has always been HMRC’s stance, expectation and bargaining powers have rarely been used in a judgment.

What this case reinforces is that contractors cannot rely on having an ‘IR35 friendly’ contract as their only defence against an enquiry by HMRC, as this may be correctly identified in a court as a ‘sham’ contract. The courts will always examine the evidence concerning the real relationship between a contractor and their client. If it is one of employment and not a genuine business to business relationship, the courts will rule accordingly.

We have lots of experience in dealing with employment status enquiries and should you require any further information please contact Elliott Buss Email : elliottb@bpuaccountants.co.uk