“(1) This Chapter applies where — (a) an individual (“the worker”) personally performs, or is under an obligation personally to perform, services for another person (“the client”), (b) the services are provided not under a contract directly between the client and the worker but under arrangements involving a third party (“the intermediary”), and (c) the circumstances are such that — (i) if the services were provided under a contract directly between the client and the worker, the worker would be regarded for income tax purposes as an employee of the client or the holder of an office under the client… (4) The circumstances referred to in subsection (1)(c) include the terms on which the services are provided, having regard to the terms of the contracts forming part of the arrangements under which the services are provided.”
“The Appellant is the personal service company of Ms Kaye Adams, who performs services for the BBC and other media organisations. Ms Adams started her career with Central Television in 1984 and has been a freelance journalist since the mid-1990s. Her work other than for the BBC has included appearances on TV in programmes such as “Loose Women” on ITV and the newspaper review on Sky, together with columns for various newspapers and magazines such as The Daily Mirror, The Sunday People and No 1 magazine. In addition, Ms Adams has worked extensively in the corporate sector, hosting events and awards evenings and giving presentations. Ms Adams also has a significant social media profile and has written two books in collaboration with her friend and colleague, Ms Nadia Sawalha.”
“This Contract does not require that the Contributor’s services are provided on an exclusive basis. During the Term the BBC will have first call on the freelance services of the Contributor (subject only to any prior professional commitments of the Contributor which have been confirmed to the BBC Representative in writing prior to signature hereof).”
“During the Term the Contributor will not without the prior written consent of the BBC Representative, such consent not to be reasonably withheld, appear in any other third party audio and/or video visual content primarily intended for audiences in the United Kingdom and the Republic of Ireland, and it would be reasonable for the BBC Representative to withhold consent where such third party could reasonably be considered to be in direct competition with the Services (e.g. in terms of scheduling either the provision of the Services or there being made available to the public), or which would otherwise conflict with the BBC’s Standards.”
“A contract of service exists if these three conditions are fulfilled. (i) The servant agrees that, in consideration of a wage or other remuneration, he will provide his own work and skill in the performance of some service for his master. (ii) He agrees, expressly or impliedly, that in the performance of that service he will be subject to the other's control in a sufficient degree to make that other master. (iii) The other provisions of the contract are consistent with its being a contract of service.”
“Even if the existence of “mutuality of obligation” and the BBC’s editorial control means that each hypothetical contract met the first two of MacKenna J’s conditions in RMC…they will not, in and of themselves, suffice if the other terms of the relevant contract are inconsistent with the relevant contract’s being an employment contract.”
“(c) Ms Adams had no right of substitution but had instead to perform the relevant services herself; (d) the BBC had ultimate editorial control over the content of the programmes; (e) the BBC would be obliged to pay the Minimum Fee in circumstances where Ms Adams failed to achieve the Minimum Commitment because the BBC did not call on her to present a programme which she was willing and able to present; (f) the Minimum Fee would be reduced pro rata in circumstances where Ms Adams failed to achieve the Minimum Commitment because she was unwilling or unable to present a programme; (g) all intellectual property in relation to the programme content belonged to the BBC and Ms Adams waived all of her moral rights to such content; (h) Ms Adams was required to attend editorial training and to undergo a full medical, in each case should the BBC so request; (i) Ms Adams was responsible for providing her own clothing; (j) Ms Adams was not entitled to holiday or sick pay, maternity leave or any pension entitlement; and (k) Ms Adams was not entitled or obliged to receive a review, was not subject to the formal procedures applicable to BBC employees when a change was made to the nature of their work obligations and was not entitled to apply as an insider for internal vacancies.”
“(1) A right in the BBC to restrict Ms Adams’s other engagements as set out in clause 8.2 of the Written Agreement. (2) A BBC right of “first call” on the terms set out in clause 8.1 of the Written Agreement modified as follows: (a) Ms Adams did not have to notify all of her competing engagements to the BBC before signature of the Written Agreement. (b) The BBC had to have a good reason for insisting that Ms Adams give it first call on her services at the expense of other engagements. Non-exhaustive examples of good reasons were that the competing engagements were unsuitable from a BBC perspective: either because they could have reflected poorly on the BBC or because they would involve Ms Adams not being available for an episode of the Kaye Adams Show. (c) Before enforcing its contractual right of first call, the BBC had to engage in reasonable discussions with Ms Adams to see if adjustments to the schedule could be made to accommodate her reasonable other commitments, for example, by allowing Ms Adams to present the show from a different location. The obligation of flexibility that this imposed on the BBC was higher in relation to any episode of that show beyond the 160th. (3) An obligation on the BBC to provide, and Ms Adams to present, at least 160 episodes of the Kaye Adams Show per year. (4) An obligation on Ms Adams to attend at such times and such places as the BBC reasonably required, with the question of what attendance is “reasonable” to be determined so as to give Ms Adams a reasonable opportunity to undertake other appropriate non-BBC engagements. (5) An obligation on Ms Adams to adhere to BBC editorial policies and applicable OFCOM guidelines to the same extent as set out in the Written Agreement.”
“The reason why a self-employed plumber doing some work on the first day of the tax year is not an employee is to be found not just in the contractual terms and conditions governing that piece of work, but also in the continuum of that plumber’s working life over previous tax years.”
“It is, therefore, necessary to consider whether the activities that Ms Adams performed for the BBC under the hypothetical contract were of the same nature and kind as those that she carried on as an independent contractor. It is also necessary, when doing so, to consider whether there is some relevant difference between the activities undertaken for the BBC and those performed as an independent contractor.”
“Those figures are significant. However, they have to be understood in the context of Ms Adams’s chosen profession. Her second witness statement in particular paints a vivid picture of the uncertainties inherent in it. Not only are audiences fickle, but a change of a show’s producer might result in a reduction of airtime. Even ostensibly successful and popular shows like “Loose Women” could go off air for 12 months. Understood in those terms, we do not consider the stability and economic dependence which the hypothetical contract afforded to be inconsistent with a conclusion that it was entered into in the course of Ms Adams’s profession as a freelance journalist and broadcaster. Rather, the conclusion that we have reached is that, in an uncertain profession, Ms Adams had succeeded in those tax years for the time being at least in securing a reasonably stable revenue stream that was material in amount. No doubt the longer that state of affairs persisted, the less likely it would be that successive renewals of the hypothetical contract would be entered into in the course of her freelance profession. Similarly, if, over time, Ms Adams’s other revenue streams had diminished so that the BBC work represented a greater percentage of her gross income, she might have tipped over into employment. However, HMRC accepted that in the tax years 2013/14 and 2014/15, the hypothetical contract was not of employment (see [3] of the Decision). We do not consider that the degree of economic dependence in just two following tax years was sufficient to displace that conclusion.”
“We therefore do not consider that there was any relevant difference between the characterisation of Ms Adams’s activities under the hypothetical contracts in the 2015/16 and 2016/17 tax years and the characterisation of either (i) her activities under hypothetical contracts with the BBC in 2013/14 and 2014/15 or (ii) her other activities as a self-employed journalist and broadcaster in other tax years. Therefore, we consider that the prima facie conclusion reached at the end of Stage 2 is to be displaced because, when entering into the hypothetical contracts here at issue, Ms Adams would have been entering into business on her own account.”
“…it seems to me that where one finds a method of earning a livelihood which does not consist of the obtaining of a post and staying in it, but consists of a series of engagements and moving from one to the other - and in the case of an actor's or actress's life it certainly involves going from one to the other and not going on playing one part for the rest of his or her life, but in obtaining first one engagement, then another, and a whole series of them - then each of those engagements cannot be considered an employment, but is a mere engagement in the course of exercising a profession, and every profession and every trade does involve the making of successive engagements and successive contracts and, in one sense of the word, employments.”
“I do not think most people today would use the word “post,” which does not seem very apt to cover the countless instances of employment in the sense of a contract of service; but every word of that judgment is applicable as between the carrying on of a profession and an engagement in the course of carrying on that profession, on the one hand, and a contract of employment, on the other hand. The fact that an actor normally undertakes a succession of engagements in the course of carrying on that profession in no way involves the result that if an actor enters an acting employment in the nature of a post, then he is not assessable under Schedule E in respect of the income arising from that employment.”
“If the provisions of the contract as a whole are inconsistent with its being a contract of service, it will be some other kind of contract, and the person doing the work will not be a servant.”
“I see no reason why it was not open to the tribunal to decide that, while the degree of the employer’s control was sufficient at stage two of the enquiry, the worker’s degree of autonomy in deciding whether to subject himself to that degree of control, how often and when, was a factor pointing away from a contract of service at stage three of the enquiry.”
“If control is not a decisive test, what then are the other considerations which are relevant. No comprehensive answer has been given to this question, but assistance is to be found in a number of cases.”
“The observations of Lord Wright, of Denning L.J. and of the judges of the Supreme Court suggest that the fundamental test to be applied is this: "Is the person who has engaged himself to perform these services performing them as a person in business on his own account?" If the answer to that question is "yes," then the contract is a contract for services. If the answer is "no," then the contract is a contract of service. No exhaustive list has been compiled and perhaps no exhaustive list can be compiled of the considerations which are relevant in determining that question, nor can strict rules be laid down as to the relative weight which the various considerations should carry in particular cases. The most that can be said is that control will no doubt always have to be considered, although it can no longer be regarded as the sole determining factor; and that factors which may be of importance are such matters as whether the man performing the services provides his own equipment, whether he hires his own helpers, what degree of financial risk he takes, what degree of responsibility for investment and management he has, and whether and how far he has an opportunity of profiting from sound management in the performance of his task.”
“In the present case it is clear that on each occasion on which Mrs Irving engaged herself to act as an interviewer for a particular survey she agreed with the company, in consideration of a fixed remuneration, to provide her own work and skill in the performance of a service for the company. I therefore proceed to ask myself two questions: First, whether the extent and degree of the control exercised by the company, if no other factors were taken into account, be consistent with her being employed under a contract of service. Second, whether when the contract is looked at as a whole, its nature and provisions are consistent or inconsistent with its being a contract of service, bearing in mind the general test I have adumbrated.”
“The application of the general test may be easier in a case where the person who engages himself to perform the services does so in the course of an already established business of his own; but this factor is not decisive, and a person who engages himself to perform services for another may well be an independent contractor even though he has not entered into the contract in the course of an existing business carried on by him.”
“In some cases, as for instance, with a jobbing gardener or a carpenter or a music teacher, who is found to be carrying on the activities in question for several customers or clients as part of his or her own business, the test may be very helpful indeed, but in many other cases the answer to the question whether the person concerned is carrying on business on his or her own account can only come as the corollary of the answer to the question whether he or she was employed under a contract of service.”
“It is clear from these cases that there is no single satisfactory test governing the question whether a person is an employee or is self-employed. As Lord Griffiths observed in the last, most recent and authoritative case the question has never been better put than by Cooke J. in the Market Investigations case, at p. 184G. The question is: does the taxpayer perform his services as a person in business on his own account? If he does, his work as a vision mixer for the various television production companies must be regarded as performed under a series of contracts for services, entered into by him in the course of carrying on his own business. If he does not, his work must be regarded as performed under a series of contracts of employment with those companies. In order to decide whether a person carries on business on his own account it is necessary to consider many different aspects of that person's work activity. This is not a mechanical exercise of running through items on a check list to see whether they are present in, or absent from, a given situation. The object of the exercise is to paint a picture from the accumulation of detail. The overall effect can only be appreciated by standing back from the detailed picture which has been painted, by viewing it from a distance and by making an informed, considered, qualitative appreciation of the whole. It is a matter of evaluation of the overall effect of the detail, which is not necessarily the same as the sum total of the individual details. Not all details are of equal weight or importance in any given situation. The details may also vary in importance from one situation to another.”
“The decided cases give clear guidance in identifying the detailed elements or aspects of a person's work which should be examined for this purpose. There is no complete exhaustive list of relevant elements. The list includes the express or implied rights and duties of the parties; the degree of control exercised over the person doing the work; whether the person doing the work provides his own equipment and the nature of the equipment involved in the work; whether the person doing the work hires any staff to help him; the degree of financial risk that he takes, for example, as a result of delays in the performance of the services agreed; the degree of responsibility for investment and management; how far the person providing the services has an opportunity to profit from sound management in the performance of his task. It may be relevant to consider the understanding or intentions of the parties; whether the person performing the services has set up a business-like organisation of his own; the degree of continuity in the relationship between the person performing the services and the person for whom he performs them; how many engagements he performs and whether they are performed mainly for one person or for a number of different people. It may also be relevant to ask whether the person performing the services is accessory to the business of the person to whom the services are provided or is “part and parcel” of the latter's organisation.”
“Whatever other developments this branch of the law may have seen over the years, mutuality of obligation and the requirement of control on the part of the potential employer are the irreducible minimum for the existence of a contract of employment.”
“…there is a consistent line of authority contained in decisions of this court, binding both on this court and on inferior tribunals, to the effect that the three elements of a contract of service identified by MacKenna J…must be present before a contract of service can be identified, whatever other elements there may be which point one way or another.”
“For my part, I regard the quoted passage from Ready Mixed Concrete as still the best guide and as containing the irreducible minimum by way of legal requirement for a contract of employment to exist. It permits tribunals appropriate latitude in considering the nature and extent of “mutual obligations” in respect of the work in question and the “control” an employer has over the individual. It does not permit those concepts to be dispensed with altogether. As several recent cases have illustrated, it directs tribunals to consider the whole picture to see whether a contract of employment emerges. It is though important that “mutual obligation” and “control” to a sufficient extent are first identified before looking at the whole.”
“The whole of the IR35 regime is restricted to a situation in which the worker, if directly contracted by and to the client ‘would be regarded for income tax purposes as an employee of the client’. That question has to be determined on the ordinary principles established by case law (see for instance two cases mentioned in the written evidence, [Market Investigations] and Hall v Lorimer).”
“The fact that Synaptek (and notionally Mr Stutchbury) was in business on its (notionally his) own account is no doubt an important contextual circumstance to be taken into account in determining whether the particular contract under which Mr Stutchbury was engaged by the client was one for service or of service. But it is no more than that. The weight to be given to it was, in my judgment, a matter for the general commissioners.”
“As it seems to me the present state of the law is that whether a relationship is an employment or not requires an evaluation of all the circumstances”
“The judgment of Cooke J in [Market Investigations] contains a valuable and much cited discussion of principles which are relevant to distinguishing between contracts of employment and contracts for services rendered in a self-employed capacity.”
“As Mummery J (as he then was) emphasised in Hall v Lorimer itself, the factors he referred to were not intended to be exhaustive nor were they to be applied in a mechanistic way…But what is clear is that the tribunal sought to apply the approach commended in Hall v Lorimer – indeed, it quoted from the relevant passage in that case, and I can see no basis for criticising its conclusion.”
“In my judgment there are two interrelated issues that I have to decide. The first is whether there was a proper evidential basis for the conclusion that the Claimant was self-employed. In my judgment there was. Undoubtedly there were, as Ms Robertson pointed out, numerous factors which pointed in favour of a contract of service. But that is not the issue, as the decision in Hall v Lorimer vividly illustrates. In my judgment, contrary to the submissions of Ms Robertson, there were some features of the relationship which were more consistent with a self- employed rather than an employee relationship. These included the fact that the Claimant provided some equipment, paid her own expenses, paid for some of her training, and worked for a number of clients. In addition, she was treated differently to employees with regard to clothing and in the form which appraisals took…It does not seem to me that the only proper conclusion in the circumstances is that the Claimant must be treated as an employee.”
“Putting it more broadly, where it is shown in relation to a particular contract that there exists both the requisite mutuality of work-related obligation and the requisite degree of control, then it will prima facie be a contract of employment unless, viewed as a whole, there is something about its terms which places it in some different category. The judge does not, after finding that the first two conditions are satisfied, approach the remaining condition from an evenly balanced starting point, looking to weigh the provisions of the contract to find which predominate, but rather for a review of the whole of the terms for the purpose of ensuring that there is nothing which points away from the prima facie affirmative conclusion reached as the result of satisfaction of the first two conditions.”
“I do not think the judgment of Briggs J (as he then was) in the Weight Watchers case should be treated as creating something like a legal presumption of an employment relationship in cases where the first two stages of the three stage test are met. The obligation of the tribunal is to “paint a picture from an accumulation of detail” (as Mummery J (P) put it in Hall v.Lorimer (Inspector of Taxes)[1992] ICR 739 , at 744F-H). An “informed, considered, qualitative appreciation of the whole” may be gained by standing back from the picture, he said.”
“10. One of the problems is that a standard contract may be used for actors who fall into either category [i.e. employed or self-employed]. The context in which the contract is entered into has to be considered as well as the terms of a particular contract… 13. The factor principally relied on by HMRC is the pattern of work and the distinction made in Davies v Braithwaite between a post (or a series of posts) and engagements entered into as part of self-employment. We consider that the Appellants are firmly on the Davies v Braithwaite and Hall v Lorimer side of the line and not the Fall v Hitchens side. They do not have a series of posts with various cruise lines, lasting an average of only 13 days for Mr Sidwick, or 4 days for Mr Matthews, but earn their living by entering into a series of separate engagements with a number of different cruise lines in a similar way to actors but with far shorter engagements than normally for actors.”
“The critical question was as to whether [sic] the nature of those contractual obligations. Were they such as to render it a contract of employment? To use the language of McKenna J [sic], were the provisions of the contract consistent with it being a contract of service? In my view, the most important finding in that regard was the Tribunal’s inference from the evidence that the employer was under no obligation to pay the dancer anything at all.”
“This approach recognises, therefore, that the issue is not simply one of control and that the nature of the contractual provisions may be inconsistent with the contract being a contract of service. When applying this test, the court or tribunal is required to examine and assess all the relevant factors which make up the employment relationship in order to determine the nature of the contract.”
“The error in this case was in treating the absence of actual day-to-day control as the determinative factor rather than addressing the cumulative effect of the totality of the provisions and all the circumstances of the relationship created by it.”
“…if, over time, Ms Adams’s other revenue streams had diminished so that the BBC work represented a greater percentage of her gross income, she might have tipped over into employment. However, HMRC accepted that in the tax years 2013/14 and 2014/15, the hypothetical contract was not of employment (see [3] of the [FTT] Decision). We do not consider that the degree of economic dependence in just two tax years was sufficient to displace that conclusion.”
“We therefore do not consider that there was any relevant difference between the characterisation of Ms Adams’s activities under the hypothetical contracts in the 2015/16 and 2016/17 tax years and the characterisation of either (i) her activities under hypothetical contracts with the BBC in 2013/14 and 2014/15 and (ii) her other activities as a self-employed journalist and broadcaster in other tax years.”
“The Respondent remains of the view that the contracts in question for those years have all of the hallmarks of contracts of employment. However, the engagements in question took up a smaller proportion of Ms Adams’ time than those in later years. In addition, income generated from those contracts during those periods is relatively low when considered against the total income generated by the Appellant. Different factors would therefore require to be considered by the Tribunal in considering those years than arise in 2015/16 and 2016/17. Given the level of the tax in issue in 2013/14 and 2014/15, the Respondents have formed the view that it would not be an appropriate use of resources to continue to oppose the appeals in respect of those years.”
“57. The concern to which tribunals must be alive is that armies of lawyers will simply place substitution clauses, or clauses denying any obligation to accept or provide work in employment contracts, as a matter of form, even where such terms do not begin to reflect the real relationship… 58. In other words, if the reality of the situation is that no one seriously expects that a worker will seek to provide a substitute, or refuse the work offered, the fact that the contract expressly provides for these unrealistic possibilities will not alter the true nature of the relationship. But if these clauses genuinely reflect what might realistically be expected to occur, the fact that the rights conferred have not in fact been exercised will not render the right meaningless. 59. … Tribunals should take a sensible and robust view of these matters in order to prevent form undermining substance…”
“[53] In my judgment the true position, consistent with Tanton, Kalwak and Szilagyi, is that where there is a dispute as to the genuineness of a written term in a contract, the focus of the enquiry must be to discover the actual legal obligations of the parties. To carry out that exercise, the tribunal will have to examine all the relevant evidence. That will, of course, include the written term itself, read in the context of the whole agreement. It will also include evidence of how the parties conducted themselves in practice and what their expectations of each other were. Evidence of how the parties conducted themselves in practice may be so persuasive that the tribunal can draw an inference that that practice reflects the true obligations of the parties. But the mere fact that the parties conducted themselves in a particular way does not of itself mean that that conduct accurately reflects the legal rights and obligations. For example, there could well be a legal right to provide a substitute worker and the fact that that right was never exercised in practice does not mean that it was not a genuine right…”
“76. Once this is recognised, it can immediately be seen that it would be inconsistent with the purpose of this legislation to treat the terms of a written contract as the starting point in determining whether an individual falls within the definition of a “worker”
“If a contractual right, as for example a right to substitute, exists, it does not matter that it is not used. It does not follow from the fact that a term is not enforced that such a term is not part of the agreement.”
Showing the 50 most senior of 61.