Red, White and Green Ltd v Revenue & Customs (INCOME TAX AND NATIONAL INSURANCE) [2020] UKFTT 109 (TC)

“…directs attention in the first instance to the services provided by the worker for the client, and then asks whether the circumstances (widely defined in paragraph 1(4) in terms which include, but are not confined to, the terms of the contract forming part of the arrangements) are such that, if the services were provided under a contract directly between the client and the worker, the worker would be regarded as an employee of the client. ”

“they will be based on the contents of the second contract between the service company and the end user, but with the worker himself agreeing that he will provide his services to the end user on, as near as may be, whatever terms are agreed between the service company and the end user.”

“(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.”

“[RWG] acknowledge that [Mr Holmes’] participation in the Programme throughout the Term in the manner set out above is integral to the Programme and a material term of the Agreement.” (9) RWG was entitled to a fixed fee for each show performed and a further small fee for each weekend link recording session undertaken (plus VAT if applicable). (10) The fees were payable upon completion of the services for each engagement type undertaken during the term of the agreement. It was provided that ITV would produce invoices relating to the fees and that RWG would accept tax invoices created by ITV on its behalf in respect of payments due under the agreement. 24. Benefits : RWG was entitled to receive certain additional benefits for Mr Holmes, namely, (a) the provision of a car for him to travel in to and from the studio, (b) a selection of clothing for his appearances on the programme, (c) the reimbursement of reasonable travel and accommodation expenses where he was required to render services outside a 50 mile radius from Charing Cross in London, and (d) any other expenses directly incurred in connection with the services on presentation of receipts and subject to prior approval by ITV. Mr Holmes said that the clothing benefit was worth around £5,000 to £6,000 per year. He accepted that ITV provided all necessary insurances. He provided his own earpiece. 25. Option to renew : RWG granted and, procured that Mr Holmes, granted ITV an exclusive option to engage Mr Holmes as a presenter on any further series of This Morning and/or spin off programmes, if any, on substantially the same terms and conditions set out in the agreement. This was exercisable by ITV, at its sole discretion, at any time during the period from signing of the agreement until the period ending three months after the expiry of the term. 26. Copyright and other rights : RWG assigned to ITV all relevant copyright and moral rights. ITV had the unlimited right to edit, copy, alter, add to, take from, adapt and/or translate the product of Mr Holmes’ work. 27. Editorial control : RWG was required to acknowledge and procure that Mr Holmes acknowledged that “[ITV] shall have absolute discretion and control over the editorial content of the Programme and to the Products of [Mr Holmes’] Services”. 28. Restrictions on activities : RWG warranted that neither it nor Mr Holmes would “enter into any professional or other commitment or undertake work for any third party which would or might conflict with the full and due rendering of [Mr Holmes’] Services and observance of [Mr Holmes’] obligation herein” and would not “engage in any conduct that may bring [ITV], the Programme or the Broadcaster into disrepute”. 29. Warranties and undertakings : (1) RWG warranted that “ the rights hereby granted and assigned are vested in [RWG] and/or to [Mr Holmes] absolutely”. (2) RWG agreed to procure that “[Mr Holmes] shall provide the Services conscientiously and in a competent manner as a first class presenter as and where required and in full willing co-operation with such persons as [ITV] may require”. (3) RWG agreed to procure compliance with health and safety guidelines and that “[Mr Holmes] shall obtain knowledge of and comply with all rules and regulations for the time being in force at such places where [Mr Holmes] provides his Services, and of the television programme guidelines laid down by OFCOM including without limitation regarding undue prominence”. (4) RWG agreed and agreed to procure that “[Mr Holmes] agrees… that he shall not wear clothing, accessories or footwear which are branded or have visible logos. If asked to do so by [ITV], [Mr Holmes] shall immediately remove or change any item of clothing, accessory or footwear. [ITV’s] decision in this regard shall be final”. (5) RWG agreed to and to procure that Mr Holmes: (a) “notifies [ITV] prior to the transmission of the Programme of any press, radio or television advertisement or commercial which [Mr Holmes] makes, contributes to, appears in or promotes or which [Mr Holmes] has made, contributed to, appeared in or promoted which might be broadcast any time transmission of the Programme”; (b) “shall use his best endeavours to attain and maintain such as state of health as will enable him to render the Services…as effectively as possible and as will enable [ITV] to effect insurance on [Mr Holmes] on reasonable terms for our own benefit against losses arising from [Mr Holmes’] liability to perform the said Services”; (c) “shall not…without our consent engage in any hazardous pursuits….nor take any risk the taking of which would invalidate or affect any normal policy of insurance on his health or life or otherwise affect the performance of his Services herein”; (d) “shall not advertise or endorse any products, services or refer to any charity whilst providing the Services during the recording or live transmission of the Programme…”; (e) “shall not use the name of the Programme or ITV or the Programme broadcaster…or use his role in, or association with the Programme in connection with any commercial or charitable work for any third party without our prior written consent”; (f) “shall at our reasonable request undergo a full medical examination by a doctor…and acknowledge that the engagement herein is subject to the results of such medical examination being to our satisfaction”; (6) In the meeting notes ITV are recorded as confirming that for the purposes of the above provisions, a statement of Mr Holmes’ health would be enough. If ITV asked Mr Holmes to undertake something out of the ordinary, such as to climb a mountain, then he would be asked to undergo a medical examination for insurance purposes. Insurance would be to cover ITV and as part of the health and safety requirement.

“You hereby undertake and shall procure that [Mr Holmes] undertakes (without the requirement for further payment) to be available …..for press interviews, promotional shoots, photographs, press launches, public relations and other events and feature articles and/or any other advertising, publicity and promotional requirements in connection with the Programme, the broadcaster of the Programme and/or the ITV group” (including online activities) “as and when reasonably required and requested by us and you hereby grant and shall procure that [Mr Holmes] hereby grants to us unlimited rights to use the products of the same in any manner and in all media, for promotional purposes connected with the Programme and products or services thereof…” 31. There was a statement that nothing in the agreement constituted Mr Holmes as an employee and RWG was solely responsible for all taxes. 32. ITV agreed that, subject to compliance with the agreement, and “subject to the practice of the person(s) commissioning or financing the production of the Programme, if the Programme shall incorporate any part of the Services [ITV] agree to accord [Mr Holmes] a screen credit and, as we deem appropriate, credit in advertising material issued in connection with the presentation of the Programme”. 33. Termination : (1) The contract could be terminated as a result of a number of stated events, including: (a) if RWG or Mr Holmes “fails, refuses or neglects to perform any of the obligations herein or are otherwise in breach of any obligation undertaking or warranty contained in this Agreement and such failure, refusal, neglect or breach is not remedied (if capable of remedy) within 2 (two) days of our written notice to you requiring the same”; (b) Mr Holmes’ inability personally to render the services, including an inability due to ill-health, injury, mental or physical disability or other cause for more than five days in aggregate provided none of these were caused by Mr Holmes’ reckless and/or wilful acts or omissions; (c) RWG or Mr Holmes gave public expression to any matter of public, political, social or other controversy; (d) RWG or Mr Holmes “commit any act or do or neglect to do anything, the commission or omission of which brings or is intended to bring [Mr Holmes], the Programme, [ITV], any of our group companies or the broadcaster into public disregard or involves [ITV] or the broadcaster in conflict with OFCOM”; and/or (e) if production of the programme was hindered by certain events beyond the parties’ control (such as strikes, technical failures or natural disasters) (defined as an “Event of Force Majeure”) for more than five business days. (2) If the contract was terminated under the above provisions, RWG was entitled to receive only payment accrued as due and payable prior to the date of termination in respect of the services rendered. (3) ITV also had the right to terminate the engagement on four weeks written notice without specifying any reason on paying a portion of the fee commensurate to the amount of services provided up to the date of termination (which was to constitute the full extent of ITV’s liability to RWG and Mr Holmes as a result of such termination). (4) ITV was entitled to suspend Mr Holmes’ engagement if RWG or Mr Holmes was in breach of the agreement or Mr Holmes was incapacitated from rendering the services by ill-health, injury, mental or physical disability or other cause or if the programme was prevented, interrupted or delayed by any Event of Force Majeure. The suspension was to last during the relevant event plus such further period (not exceeding five days) as may reasonably be required by ITV to resume using the services. Whilst the suspension was in place no payment was due provided that all other obligations and warranties remained in place. Mr Holmes was not permitted, without ITV’s prior written consent, to render his services to any other party during the period of suspension. (5) In the meeting notes ITV is recorded as stating that the above provisions are generic terms and conditions and the provision regarding four weeks’ notice is not particularly relevant in this case but possibly would be invoked if the programme ratings fell and ITV did not want to give this as a reason for termination. 34. Assignment : ITV was entitled to assign the benefit of the agreement and of the services and products to any third party and RWG was required to procure that Mr Holmes provided his services to any such assignee on the basis that ITV remained liable for all obligations under the agreement notwithstanding the assignment. It was stated that: “Neither [RWG] nor [Mr Holmes] shall assign, transfer, sub-contract, sub-licence or deal in any manner which this Agreement or any of the rights and obligation arising from this Agreement”. 35. I note that the terms refer to ITV’s obligations to Ofcom. In short Ofcom is the body which is required under the Communications Act 2003 (as amended) and the Broadcasting Act 1996 (as amended) to draw up a code for television and radio, covering standards in programmes, sponsorship, product placement in television programmes, fairness and privacy. I refer to this code as the Ofcom code. Broadcasters are required by the terms of their Ofcom licence to observe the Ofcom Code. Where the Ofcom code has been breached, Ofcom will normally publish a finding and explain why a broadcaster has breached the code. When a broadcaster breaches the code deliberately, seriously or repeatedly, Ofcom may impose statutory sanctions against the broadcaster. The code is set out in terms of principles, meanings and rules and, for some sections (such as fairness and privacy) also includes a set of “practices to be followed” by broadcasters. Ofcom state that the principles are there to help readers understand the standards objectives and to apply the rules and that broadcasters must ensure that they comply with the rules as set out in the code. Ofcom state that programme makers who require further advice on applying the code should, “in the first instance, talk to those editorially responsible for the programme and to the broadcaster’s compliance and legal officers”

“deliberately spread the risk of losing a sole source of income and therefore I am in charge of my own destiny. It’s an industry where you can never rest, or never deliberately relax. Work is short for me at the moment and I am frantically pursuing possible future plans. That is the life of a freelance.” 43. He continued that unlike most presenters he was not “beholden or exclusive” to any one broadcaster; rather he worked for numerous parties on television, radio, and online, he worked as a contributor to magazines and newspapers, he hosted corporate events and he was involved in media training. He said that he did not have a “staff job” anywhere; rather as a “one-man band, I am responsible for what I do and where I do it”. 44. Mr Holmes listed his other engagements (in addition to his work on Sunrise and This Morning) as including appearing on/presenting BBC Songs of Praise and TalkSport Radio, conducting TalkRadio profile interviews, writing columns for Best Magazine and the Daily Mirror, appearing on numerous series on Channel 5, appearing on ITV’s Good Morning Britain and Loose Women, appearing on various panel shows, Manchester United Television and a game show series for Fox TV in the USA. He also has a production company which develops programme formats and ideas. 45. RWG’s advisers produced a schedule which they said showed the income RWG received in respect of Mr Holmes’ work on This Morning, Sunrise and other activities in each period of 12 months ending on 30 April in the specified year and the percentage that income formed of its total income. The percentages were as follows: This Morning Sunrise Other income 2012 71.8 - 28.2 2013 72.8 - 27.2 2014 31.8 54.1 14.7 2015 18.6 80.0 1.6 46. As noted, it is not clear whether Mr Holmes’ work on Sunrise during the relevant period was performed under a contract directly with Mr Holmes or under contracts with RWG at least in respect of 2014 and 2015 as the schedule suggests. If the income from Sunrise did not arise to RWG, its income from This Morning was never less than 68% of its total income from all sources. If the income from Sunrise is correctly included for the later two years, the income from This Morning was never less than 19% of RWG’s total income. 47. According to HMRC’s analysis of the schedules provided, during the relevant period, Mr Holmes presented (a) 92 episodes of This Morning and 21 or 22 weekend links in the tax year 2011/12 (b) 59 episodes in the 2012/13 tax year (c) 45 episodes in the 2013/14 tax year and (d) 54 episodes in the 2014/15 tax year. Whilst Mr Holmes primarily presented the programme on Fridays, in each year he presented it on other days on numerous occasions. 48. In the correspondence in the bundles, RWG’s advisers accepted that the income in respect of This Morning was RWG’s main income in the tax years 2011/12 and 2012/13. Mr Holmes accepted that RWG received a regular stream of work in respect of This Morning which paid for his secretary and driver and funded other projects. 49. Mr Holmes’ personal tax returns and calculations for the relevant periods show that he had substantial amounts of income which he accounted for as income from self-employment in the tax years in question: namely, as regards turnover and self-employment profit in respect of the tax years 2011/12, 2012/13, 2013/14 and 2014/15 respectively: (a) £424,783 and £298,755 (b) £406,624 and £286,532 (c) £464,483 and £348,286 and (d) £251,319 and £169,371. 50. In its accounts for the periods ending on 30 April 2013, 30 Aril 2014 and 30 April 2015, RWG is shown as having turnover from business activities of £267,862, £634,762 and £1,025,348 respectively. Nature of work on This Morning 51. Mr Holmes said that This Morning is regarded as a light entertainment programme by ITV. On its website it is billed as a morning magazine featuring a mixture of celebrity interviews, showbiz news and topical discussions. He thought that the show he presented on Fridays was a “less newsy” and a more entertaining programme than the show on the other days of the week. The audience for the Friday programme is significantly higher than that for the other days. 52. He said that he is the best live television presenter in the country; that skill keeps him in high demand. He thought that he was engaged by ITV because he could do the job better than anyone else, he could bring or hold ratings and he could create a rapport with guests and viewers. He considered that he is the market leader and an expert in his field. In his view, ITV want him as an entertainer who brings a maverick element to the show. 53. He considered his role to be that of the “anchor man” who brings his own stamp and interpretation to the programme. In his view, his role is specialist and not simply to present material devised by others. It is to mould the features that the programme maker wishes to put into the programme into a coherent whole, to interview guests, to participate in phone-ins and generally to create an entertaining programme. He said in his witness statement that in a live programme he : “flies by the seat of my pants and anyone who’s in the studio with me needs to hold on to my coat tails. Once I am on air I am effectively in total control of what needs to happen. If I were to say something that the producers felt to be unacceptable, there is nothing they could do. I am obviously aware of the Ofcom guidance and it would clearly be damaging not only to ITV but also to me personally if I were to deliberately breach it.” 54. Mr Holmes stressed on a number of occasions in his oral evidence that in his view he “controls” the show. He said “it is me telling them what to do, not the other way around” and “in practice I dictate” the programme and “I am my own creation, I am not anybody’s slave on This Morning” and that people would laugh if it was suggested that he was controlled. He said he was not there to follow other people’s rules. As a career broadcaster and expert in his field, others asked him for advice. In my view, these general comments have to be viewed in the light of his more specific comments and the views of ITV as recorded in the meeting notes (in each case, as set out below). Overall in that context, I accept that, in practice, Mr Holmes had considerable autonomy over the way in which he presented on the live show using his own presenting style and words and that, as regards matters that were pre-planned, due to his considerable experience and expertise, his views often prevailed. 55. Throughout the period in dispute Mr Holmes’ co-presenter was normally his wife, Ms Ruth Langsford. He said that, although they were each engaged separately by ITV, ITV wanted the chemistry between them to drive the show. He thought it was largely irrelevant to ITV how he and Ms Langsford split the work between them. In his view, the interaction between them “brings the sparkle” and gives an “intimate feel” to the show. He could only achieve this if he is left alone to get on with it and be himself. With his co-presenter he decided the shape of the show and who should front a particular item. Decisions usually need to be made “on the hoof” during the course of the show. He said that it is not practicable to bring the producer into such on-air discussions when the show is live and often the producers are younger and less experienced (he thought their average age was around 27). He said that it was a case of him telling them what to do. 56. He accepted that ITV wanted his services. He was not permitted to provide a replacement. If he was ill it was for ITV to find someone else and RWG did not get paid for that other person’s services. In the meeting notes the editor is recorded as confirming that if for any reason RWG could not fulfil the contract, it would be for ITV to get a replacement and there would be no payment to RWG. 57.

“ultimately the final say is [the editor’s]….Day before the show the producer will phone EH to discuss what they are going to do. EH will be asked for his input, opinions on the material, etc. EH delivers the programme and he has freedom as to how this is delivered. For example when the “daily phone in” is broadcast it is normal to disguise voices, usually to cover legal issues. EH has objected to this and they did try operating without the disguise but it continues to be used. EH has influenced what is broadcast and [the editor] has dropped guest/topics where EH has voiced concerns. If [the editor] was particularly passionate that an item should be included then it would be. [The editor] can’t recall any time when this has happened.” 61. Mr Holmes said in his witness statement that he generally arrived at the studio half an hour before the show to be made up for the television lighting. At the hearing he referred to arriving minutes before the programme on occasions. He said that the editor generally came into make-up for a brief discussion, and then he went on air. 62. At the meeting with HMRC the editor is recorded as explaining the following as regards the morning of the show: (1) There is a full meeting with Ms Ruth Langsford at 08.30am where the producer meets her and discusses anything which has changed from the previous phone call. Mr Holmes usually arrives around 10.30am and any discussion takes place in make-up. The editor would love Mr Holmes to get in 30 minutes earlier but he cannot impose specific times on him. (2) The expectation is that Mr Holmes will have done all that is expected of him; that is what makes him a first class presenter. (3) Mr Holmes knows when he has to be on air but can cut it fine depending on traffic getting from Sky to ITV. Other presenters are on a much tighter rein but the editor has total trust in Mr Holmes to do his job. (4) Mr Holmes knows not to wear anything which could be seen as endorsing a product (such as Louboutin shoes, Paul Smith ties, ICE watches, etc.) If he was wearing any such item he would be asked to remove it and, if it comprised clothing/ shoes, it would be replaced from items in the ITV wardrobe. (5) Mr Holmes is provided with a car every day he is on the show to bring him to the studios from home or from Sky. That allows Mr Holmes to work whilst travelling. Mr Holmes does not incur expenses. If he had to do an outside broadcast ITV would provide hotel accommodation and a car. Costs are closely monitored within ITV for budgetary purposes. All booking for this is usually done by ITV. 63. Mr Holmes said that he prepared his own notes but ad-libbed. Whilst “in theory” links to specific segments of the show are scripted in practice, he generally uses the autocue as no more than a guide. He finds the wording can conflict with the ebb of the show and he can improve on it during a live situation. He thought that viewers could always identify presenters who are “autocue slaves” and those who bring their own life to a show with different words. At the hearing he said he did not look at the autocue because the audience can tell from a presenter’s eyes when he is simply reading it. 64. The following is recorded in the meeting notes as regards ITV’s views of how Mr Holmes operates: (1) As regards “creative input” it was stated that there is “nothing prescriptive”

“long been accepted that this is not a literalist exercise focused solely on a parsing of the wording of the particular clause but that the court must consider the contract as a whole and, depending on the nature, formality and quality of drafting of the contract, give more or less weight to elements of the wider context in reaching its view as to that objective meaning…” 96. He continued that it is affirmed in the cases that “the factual background known to the parties at or before the date of the contract, excluding evidence of the prior negotiations” is of relevance. He noted, however, that when in Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896 Lord Hoffmann (at pages 912-913) reformulated the principles of contractual interpretation, “some saw his second principle, which allowed consideration of the whole relevant factual background available to the parties at the time of the contract, as signalling a break with the past”

“(1) Interpretation is the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract. (2) …Subject to the requirement that it should have been reasonably available to the parties and to the exception to be mentioned next, [the background] includes absolutely anything which would have affected the way in which the language of the document would have been understood by a reasonable man. (3) The law excludes from the admissible background the previous negotiations of the parties and their declarations of subjective intent. They are admissible only in an action for rectification….” 98. At [11], Lord Hodge said the following as regards interpretation as “a unitary exercise”: “where there are rival meanings, the court can give weight to the implications of rival constructions by reaching a view as to which construction is more consistent with business common sense. But, in striking a balance between the indications given by the language and the implications of the competing constructions the court must consider the quality of drafting of the clause….and it must also be alive to the possibility that one side may have agreed to something which with hindsight did not serve his interest… Similarly, the court must not lose sight of the possibility that a provision may be a negotiated compromise or that the negotiators were not able to agree more precise terms.” 99. He said, at [12], that this unitary exercise involves “an iterative process by which each suggested interpretation is checked against the provisions of the contract and its commercial consequences are investigated” and to his mind: “once one has read the language in dispute and the relevant parts of the contract that provide its context, it does not matter whether the more detailed analysis commences with the factual background and the implications of rival constructions or a close examination of the relevant language in the contract, so long as the court balances the indications given by each”. 100. He concluded at [13] that “textualism” and “contextualism” are not “conflicting paradigms in a battle for exclusive occupation of the field of contractual interpretation”

“Some agreements may be successfully interpreted principally by textual analysis, for example because of their sophistication and complexity and because they have been negotiated and prepared with the assistance of skilled professionals. The correct interpretation of other contracts may be achieved by a greater emphasis on the factual matrix, for example because of their informality, brevity or the absence of skilled professional assistance......The iterative process, of which Lord Mance spoke in Sigma Finance Corpn (above), assists the lawyer or judge to ascertain the objective meaning of disputed provisions.”

“(i) ….There must be an irreducible minimum of obligation of each side to create a contract of service”. (ii) If a genuine right of substitution exists, this negates an obligation to perform work personally and is inconsistent with employee status [referring to Express & Echo Publications v Tanton [1999] IRLR 367 at 699H]. (iii) 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 : see eg the Tanton case, at p 687G.”

“ The evidence of a party as to what terms he understood to have been agreed is some evidence tending to show that those terms, in an objective sense, were agreed. Of course the tribunal may reject such evidence and conclude that the party misunderstood the effect of what was being said and done”. 111. At [33] Lord Clarke noted that, at [103], Sedley LJ said that he was entirely content to adopt the reasoning of Aikens LJ: “recognising as it does that while employment is a matter of contract, the factual matrix in which the contract is cast is not ordinarily the same as that of an arm’s length commercial contract.”

“So the relative bargaining power of the parties must be taken into account in deciding whether the terms of any written agreement in truth represent what was agreed and the true agreement will often have to be gleaned from all the circumstances of the case, of which the written agreement is only a part. This may be described as a purposive approach to the problem. If so, I am content with that description. ” 114. HMRC do not accept that the principle set out in this case, a summarised at [35], applies to the construction of the terms of contracts of this kind in place between a client and a PSC as then adopted as the basis for the assumed relationship between the parties for IR35 purposes. However, I cannot see why, as a matter of principle, the approach advocated in Autoclenz should not apply in these circumstances. It is not a question of ignoring the corporate structure but of acknowledging that a company, owned (as to the majority of shares) and operated by the individual whose personal services it provides, is likely to be in the same position as regards bargaining power as the individual would be if he contracted directly for the provision of his services. 115. It is not clear that Mr Maas was basing his view that certain terms are not “real” ones on this principle on the basis there was such a disparity in bargaining power between ITV and RWG/Mr Holmes. However, even if that is taken to be the case, on the robust approach advocated in Autoclenz , taking into account all surrounding circumstances including the conduct of the parties, I cannot see any basis for a conclusion that the contractual terms in the agreements relating to control did not represent the real legal agreement between the parties. 116. There is no evidence that viewed objectively, having regard to the reality of the situation, the relevant terms, whereby ITV had control of when and where the services were provided and Mr Holmes was subject to editorial control and to restrictions on his other activities did not represent the true agreement between the parties. The evidence does not demonstrate that these are terms inserted as a matter of form only which do not genuinely reflect what might realistically be expected to occur . This is addressed further in the conclusions set out below on the nature of the assumed relationship between ITV and Mr Holmes. Implied contract of employment between RWG and Mr Holmes 117. Finally in this section, I have considered HMRC’s argument that it is necessary to imply a contract of employment between RWG and Mr Holmes in order to give legal efficacy to many of the provisions in the agreements, such as those under which RWG had to ensure that Mr Holmes did a number of matters. HMRC said that this is relevant as (a) the tribunal must consider all the circumstances in deciding on the nature of the assumed relationship and (b) it follows that under such an implied contract RWG had a right of control over Mr Holmes which rebuts any contention that the nature of his work is inherently so skilled, difficult or immediate, that it is not possible for a party to have a right of control over him. Mr Maas did not agree with this but did not make detailed representations on it. 118. Mr Tolley referred to the decisions in Catherine Lee v Lee’s Air Farming [1960] 3 WLR 758 and S ecretary of State for Business, Enterprise & Regulatory Reform v Neufeld & Another [2009] EWCA Civ 280 )[2009] 3 All ER 79 in support of this argument. In the Lee case it was held that the deceased sole shareholder and director of a company acted as its employee in carrying out its business of aerial top dressing using a plane he flew (thereby entitling his wife to bring a claim for compensation (under certain provisions in New Zealand)). Lord Morris concluded as follows: (1) In view of their nature, he could not see that the operations were carried out by the deceased as governing director; they must have been performed under a contractual relationship with the company. There was no reason to challenge the validity of that relationship on the basis that “it was not nor could be suggested that the company was a sham or a mere simulacrum”

“If the deceased had a contract of service with the company then the company had a right of control. The manner of its exercise would not affect or diminish the right to its exercise. But the existence of a right to control cannot be denied if once the reality of the legal existence of the company is recognised. Just as the company and the deceased were separate legal entities so as to permit of contractual relations being established between them, so also were they separate legal entities so as to enable the company to give an order to the deceased.” 119. In the Neufeld case it was held, with reference to the Lee case, that there was no reason as a matter of principle why a sole director and shareholder of an insolvent company could not be held to be an employee of the company (in which case he could claim from the Secretary of State amounts due under a statutory scheme such as unpaid wages, unpaid holiday pay and redundancy). At [28], Rimmer LJ noted that it might be thought that in such a company there could be no control of the putative employee. In practice control would be exercisable by the putative employee himself since he controls the company and so it would be “easy to conclude that that cannot be real control”

"… correctly pointed out, at para 35, that, in order to imply a contract to give business reality to what was happening, the question was whether it was necessary to imply a contract of service between the worker and the end-user, the test being that laid down by Bingham LJ in The Aramis [1989] 1 Lloyd's Rep 213, 224: "necessary . . . in order to give business reality to a transaction and to create enforceable obligations between parties who are dealing with one another in circumstances in which one would expect that business reality and those enforceable obligations to exist." (3) The application of that test means, as Mummery LJ pointed out in James (para. 24), that no implication is warranted simply because the conduct of the parties "was more consistent with an intention to contract than with an intention not to contract. It would be fatal to the implication of a contract that the parties would or might have acted exactly as they did in the absence of a contract." (4) It is, however, important to focus on the facts of each case. As Mummery LJ observed in James (para.51): "there is a wide spectrum of factual possibilities. Labels are not a substitute for a legal analysis of the evidence."

“The servant must be obliged to provide his own work and skill. Freedom to do a job either by one’s own hands or by another’s is inconsistent with a contract of service, though a limited or occasional power of delegation may not be.” 130. He noted, at 515E, that “control” includes “the power of deciding the thing to be done, the way in which it shall be done, the means to be employed in doing it, the time when and the place where it shall be done”: “All these aspects of control must be considered in deciding whether the right exists in a sufficient degree to make one party the master and the other his servant. What matters is lawful authority to command so far as there is scope for it. And there must always be some room for it, if only in incidental or collateral matters….” 131. He continued, at 516A, that to find where the right resides one must look first to the express terms of the contract, and if they deal fully with the matter one may look no further. If the contract does not expressly provide which party shall have the right, the question must be answered by implication. 132. He described the third condition as a “negative” one and illustrated its interaction with the other tests with a number of examples (at 516B to 517B). He said that, for instance, if a person is engaged to build for another person but provides the necessary plant and materials at his own expense, there is a contract to produce a thing (or a result) for a price. On the other hand, if a labourer has to provide some simple tools and to accept the builder’s control, the obligation to provide the tools is not a sufficiently important matter to affect the substance of the contract as one of service. He said that, in other words, an obligation to do work subject to the other party’s control is “ a necessary, though not always a sufficient, condition of a contract of service” and: “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. The judge’s task is to classify the contract (a task like that distinguishing a contract of sale from one of work and labour). He may, in performing it, take into account other matters besides control .” 133. He continued to cite a number of authorities from which he concluded, at 522G, that the common law test as regards control is not to be restricted to the power of control over the manner of performing service but is wide enough to take account of investment and risk. He also referred to the well-known dictum of Denning LJ in Bank voor Handel en Scheepvaart N.V. v Slatford [1953] 1 QB 248 where he said that “the test of being a servant does not rest nowadays on submission to orders. It depends on whether the person is part and parcel of the organisation”

“ The master may be employed by the owners under what is clearly a contract of service, and yet the owners have no power to tell him how to navigate his ship. As Lord Parker CJ pointed out in Morren v Swinton and Pendlebury Borough Council [1965] 2 All ER 349 at 351, when one is dealing with a professional man, or a man of some particular skill and experience, there can be no question of an employer telling him how to do the work; therefore the absence of control and direction in that sense can be of little, if any, use as a test.” 135. He referred to the comments of Lord Denning as set out above and those of Lord Wright and of the US Supreme Court respectively that the question whether a person is an employee may be determined by asking “whether the party is carrying on the business, in the sense of carrying it on for himself or on his own behalf and not merely for a superior” or “as a matter of economic reality (see Montreal Locomotive Works v Montreal and A-G for Canada [1947] 1 DLR 161, at 169 and US v Silk (1946) 331 US 704). He considered, at 184G, that these observations indicated 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?’”. 136. In his view, there is no single definitive test, at 184H: “no exhaustive list has been compiled and perhaps no exhaustive list can be compiled of the considerations which are relevant….. nor can strict rules be laid down as to the relative weight which the various considerations should carry in particular cases”. 137. He thought that 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 the factors which are of importance are, at 185A to B: “ 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.” 138. He concluded that the company had extensive control consistent with employment in that case (through a guide on the technique of interviewing (much of which was couched in imperative language) and detailed instructions on conducting the interviews (see 185E to 186B). HMRC pointed to the fact that Cooke J said his conclusion on control was not affected by the fact there was a practical limitation on the possibility of giving instructions to the relevant individual while actually working in the field, because her supervisor would then have no means of getting into touch with her as: “there must be many cases when such practical limitations exist. For example, a chauffeur in the service of a car hire company may, in the absence of radio communication, be out of reach of instructions for long periods. 139. At 188A to C, Cooke J did not think it could be said the individual was in business on her own account as an interviewer on the basis that she was free to work as an interviewer for others (although there was no finding that she did so) and in her work she would, within the limits imposed by her instructions, deploy a skill and personality which would be entirely her own: “ The opportunity to deploy individual skill and personality is frequently present in what is undoubtedly a contract of service. I have already said that the right to work for others is not inconsistent with the existence of a contract of service. Mrs Irving did not provide her own tools or risk her own capital, nor did her opportunity of profit depend in any significant degree on the way she managed her work”. 140. The approach of assessing whether the relevant person was in business on his own account was followed in Fall (Inspector of Taxes) v Hitchen (1973) 1 WLR 286 and Lee Ting Sang v Chung Chi-Keung [1990] 2 AC 374 . In Fall v Hitchen it was held, at 292H to 293A, that a professional dancer was taxable as an employee on his earnings from a contract with a ballet company; virtually all the relevant factors pointed to there being a contract of service: “The taxpayer is engaged to work for a minimum period of rehearsal plus 22 weeks, and thereafter until the contract is determined by a fortnight’s notice on either side; he is engaged to work full-time during specified hours for a regular salary; the company has the first call upon his services, and indeed the exclusive call subject only to this, that its consent to the taxpayer performing elsewhere should not be unreasonably withheld; and then, again, the company provides and owns the gear used by the taxpayer with one exception…...” 141. It was noted, at 293F to G, that counsel for the appellant relied on Davies (H.M . Inspector of Taxes) v Braithwaite [1931] 2 K.B. 628 in contending that the word “employment” in the relevant taxing provision does not include engagements entered into as an “incident” to the carrying on of a profession, on the basis that “incident” means “that which formed part of the fabric of the profession”

“A man might have the steadiest employment in the world by day, and he might do something quite different in the evening and make some more money by the exercise of a profession or vocation….and even if it were in the same sphere, I do not see why he should not have both an employment as well as a profession. For instance, a musician, who holds an office or employment under a permanent engagement can at the same time follow his profession privately.” 142. At 635, Rowlatt J said that he thought the legislature “had in mind employments which were something like offices”, and said he thought “of the word "posts" as conveying the idea required”

“…. 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 one engagement, then another, and a whole series of them - then each of those engagements cannot be considered 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.” 143. Rowlatt J thought it clear, at 636, that the appellant in that case fell on the self- employment side of the line as she did not contract with a producer for a post but rather she: “makes a contract with a producer for the next thing that she is going to do, and then another producer, and then a third producer, and at any time she may make a record for a gramophone company or act for a film. I think that whatever she does and whatever contracts she makes are nothing but incidents in the conduct of her professional career.” 144. In Fall v Hitchen Sir John Pennycuick V-C commented that Rowlatt J was not saying that a professional such as an actor could not be engaged on an employment basis or as he put it in a post (and his comments were approved in Hall v Lorimer ). He noted, at 295H to 296A, that nowhere did Rowlatt J say that “if an actor enters into a contract in such terms as to amount to what he calls a post, then that actor is not chargeable” on the income as employment income. On the contrary, “it is implicit in the whole of his judgment that: “if a professional person, whether an actor or anybody else, enters into a contract involving what Rowlatt J. calls a post, then that person will be chargeable in respect of the income arising from the post [as employment income] notwithstanding that he is at the same time carrying on his profession, the income of which will be chargeable [as self-employment income]. The instance of a musician puts that point very neatly”. 145. He did not think, at 296B, that 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. However, at 296B to C: “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, that he is not assessable under Schedule E in respect of the income arising from that employment”. 146. In the Lee Ting Sang case the Privy Council held that the applicant, who was a casual worker on a building site, was an employee of the subcontractor for whom he was working at the time he suffered an accident (and was, therefore, entitled to be compensated under a Hong Kong ordinance). Lord Griffiths said, at 383F to G, that all the tests, or indicia, mentioned by Cooke J in the Market Investigations case pointed to the status of an employee. The applicant did not provide his own equipment; it was provided by his employer. He did not hire his own helpers; he gave priority to the sub-contractor’s work and if asked to do an urgent job he would tell those he was working for that they would have to employ someone else: “if he was an independent contractor in business on his own account, one would expect that he would attempt to keep both contracts by hiring others to fulfil the contract he had to leave”

“the picture emerges of a skilled artisan earning his living by working for more than one employer as an employee and not as a small businessman venturing into business on his own account as an independent contractor with all its attendant risks. The applicant ran no risk whatever save that of being unable to find employment which is, of course, a risk faced by casual employees who move from one job to another ….”

“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 process involves painting a picture in each individual case. As Vinelott J. said in Walls v. Sinnett ( 1986) 60 T.C. 150, 164: "It is in my judgment, quite impossible in a field where a very large number of factors have to be weighed to gain any real assistance by looking at the facts of another case and comparing them one by one to see what facts are common, what are different and what particular weight is given by another tribunal to the common facts. The facts as a whole must be looked at, and what may be compelling in one case in the light of all the facts may not be compelling in the context of another case."” 149. At 217A to B, notwithstanding his reservations, he examined the factors listed by Cooke J to see where that led. He noted that HMRC relied on the facts that the production company controlled the time, place and duration of each programme, Mr Lorimer did not provide any of his own equipment, he hired no staff, he ran no financial risk apart from the risk of bad financial debts and of being unable to find work, he had no responsibility for investment in or management of the work of programme making and consequently he had no opportunity of profiting from the manner in which he carried out individual assignments. He noted, at 217C, that the Special Commissioner did not fully accept the validity of these points as a matter of fact in all cases, where he said the following (as set out at 217C to D): “[The taxpayer] provides no equipment (i.e. he has no tools) he provides no “work place” or “workshop” where the contract is to be performed, he provides no capital for the production, he hires no staff for it. No; he does not. But that is not his business. He has his office, he exploits his abilities in the market place, he bears his own financial risk which is greater than that of one who is an employee, accepting the risk of bad debts and outstanding invoices and of no or an insufficient number of engagements. He has the opportunity of profiting from being good at being a vision mixer. According to his reputation so there will be a demand for his services for which he will be able to charge accordingly. The more efficient he is at running the business of providing his services the greater is his prospect of profit.” 150. It was noted, at 217E, that it was submitted that not much significance should have been attached to the risk of having no engagements because, as was pointed out in the Lee Ting Sang case, this is a risk faced by casual employees who move from one job to another. Nolan LJ agreed that was the case but said that “the risk of bad debts and outstanding invoices is certainly not one which is normally associated with employment”

“Surely the self-employed barrister advising in his chambers or the doctor advising in his surgery is selling his skill and labour and not its product. If the scene shifts to the court or to the operating theatre can the client or patient really be said to be buying the product which may be disastrous in spite of the best efforts of the advocate or the surgeon in the litigation or operation?” 152. He continued, at 218C to E, that the question, whether the individual is in business on his own account, though often helpful, may be of little assistance in the case of one carrying on a profession or vocation. For example, a “self-employed author working from home or an actor or a singer may earn his living without any of the normal trappings of a business”

“ there is much to be said in these cases for bearing in mind the traditional contrast between a servant and an independent contractor. The extent to which the individual is dependent upon or independent of a particular pay master for the financial exploitation of his talents may well be significant. It is, I think, in any event plain that Cooke J…..was not intending to lay down an all purpose definition of employment. For example, his test does not mention the duration of the particular engagement or the number of people by whom the individual is engaged. Cooke J. said…. that he took account of the fact that the lady concerned was free to work as an interviewer for others but added that there was no finding that she did so. This is of little assistance in the present case of which the most outstanding feature to my mind is that Mr. Lorimer customarily worked for 20 or more production companies and that the vast majority of his assignments……lasted only for a single day.” 153. In rejecting the argument that the Commissioner erred in law in placing reliance on the decision in Davies v Braithwaite , he agreed with Sir John Pennycuick’s explanation of that decision in Fall v Hitchen (at page 295) “as another helpful statement carrying general weight in the consideration of problems of this kind”

“To take one obvious example, an obligation by the one party to accept and do work if offered and an obligation on the other party to pay a retainer during such periods as work was not offered would in my opinion, be likely to suffice . In my judgment, however, as I have already indicated, the authorities require us to hold that some mutuality of obligation is required to found a global contract of employment. In the present case I can find no such mutuality subsisting during the periods when the applicant was not occupied in a “single engagement”.”

“I would hold as a matter of construction that no obligation on the [the company] to provide casual work, nor on [the guides] to undertake it, was imposed. There would therefore be an absence of that irreducible minimum of mutual obligation necessary to create a contract of service”. 159. In Usetech Ltd v Young (2004) 76 TC when considering the mutuality test in an IR35 context, at [57] and [58]: (1) Park J concluded from cases such as Clark and Carmichael that, if the relationship is one under which the putative employer “can offer work from time to time on a casual basis, without any obligation to offer the work and without payment for periods when no work is being done….there cannot be one continuing contract of employment over the whole period of the relationship, including periods when no work was being done. There may be an 'umbrella contract' in force throughout the whole period, but the umbrella contract is not a single continuing contract of employment”. (2) However, he noted that this “leaves open the possibility that each separate engagement within such an umbrella contract might itself be a free-standing contract of employment”

“ a contract which provided for payment (in the nature of a retainer) for hours not actually worked. It is only where there is both no obligation to provide work and no obligation to pay the worker for time in which work is not provided that the want of mutuality precludes the existence of a continuing contract of employment . See especially the Clark and Stevedoring & Haulage cases….”

“the issue of whether the employed person is required to accept work if offered, or whether the employer is obliged to offer work as available is irrelevant to the question whether a contract exists at all during the period when the work is actually being performed. The only question then is whether there is sufficient control to give rise to a conclusion that the contractual relationship which does exist is one of a contract of service or not.” 163. Lagstaff J concluded, at [47] and [48], in effect that the mutuality test extends to examining the nature of the contract and whether there is a “wage-work bargain” (as was cited with approval in Drake v Ipsos MORI ) at [33]: “Mutual obligations are necessary for there to be a contract at all. If there is a contract, it is necessary then to determine what type of contract it is. If it is a contract of employment, consequences will follow of the greatest significance….. These matters are determined by the nature of the mutual obligations by reference to which it is to be accepted that there is a contract of some type ….. It cannot simply be control that determines whether a contract is a contract of employment or not. The contract must also necessarily relate to mutual obligations to work, and to pay for (or provide) it: to what is known in labour economics as the "wage-work bargain "”. (emphasis added) 164. At [49] Langstaff J noted that it was submitted that the obligations which identify a contract as one of employment are flexible and differ according to the context relying on the judgment of Buckley J in Montgomery v Johnson Underwood Ltd [2001] ICR 819 at [23] where he said: “Clearly as society and the nature and manner of carrying out employment continues to develop so will the Court’s view of the nature and extent of "mutual obligations" concerning the work in question and "control" of the individual carrying it out…” 165. He continued that later in that case Buckley J referred to the Ready Mixed Concrete test as permitting a tribunal “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”

“we cannot see that such elastic as there may be in the idea of mutuality of employment obligations can be stretched so far that it avoids the necessity for the would be employee to be obliged to provide his work, personally. The old fashioned description of a contract of employment as one of service……puts “service” (ie the obligation to work, personally, for another) at the heart of the relationship .” 166. At [54] Langstaff J said that as “mutuality of obligation” may be used in different senses it is important to know precisely what is being considered under that label and for what purpose. He continued, at [55], that there was concern that tribunals misunderstood something further which characterises the application of mutuality in the sense of the “wage/work bargain”, namely, that: “ it does not deprive an overriding contract of such mutual obligations that the employee has the right to refuse work. Nor does it do so where the employer may exercise a choice to withhold work. The focus must be upon whether or not there is some obligation upon an individual to work, and some obligation upon the other party to provide or pay for it . Stephenson LJ in Nethermere put it as “… an irreducible minimum of obligation …”

“.. I would accept that an arrangement under which there was never any obligation on the outworkers to do work or on the company to provide work could not be a contract of service. But the mere facts that the outworker could fix their own hours of work, could take holidays and time off when they wished and could vary how many garments they were willing to take on any day or even to take none on a particular day, while undoubtedly factors…to consider in deciding whether or not there was a contract of service, do not as a matter of law negative the existence of such a contract.” 168. In the later decision in the EAT in James v Greenwich Elias J took a very similar approach to that set out in the Delphi Diesel Systems case. He noted at [16], that “sometimes, the employer’s duty is said to be to offer work, sometimes to provide pay” but, in a succinct statement of the applicable principles, the critical feature is that: “the nature of the duty must involve some obligation to work such as to locate the contract in the employment field. If there are no mutual obligations of any kind then there is simply no contract at all, as Carmichael makes clear; if there are mutual obligations, and they relate in some way to the provision of, or payment for, work which must be personally provided by the worker , there will be a contract in the employment field; and if the nature and extent of the control is sufficient, it will be a contract of employment.”

“ Even where the work-wage relationship is established and there is substantial control, there may be other features of the relationship which will entitle a tribunal to conclude that there is no contract of employment in place even during an individual engagement. O'Kelly and Ready Mixed provide examples.” 170. The decision in Cornwall County Council v Prater [2006] ICR 731 provides authority that each separate assignment undertaken by a person may constitute an employment notwithstanding the lack of on-going obligations to offer or accept further work under an umbrella contract. In that case, the Court of Appeal upheld the tribunal’s decision that (a) there was the required mutuality for there to be an employment relationship between the council and a teacher as regards each of a number of individual assignments to tech pupils out of school which were of varying duration undertaken over a ten year period and (b) the times between the assignments when the teacher undertook no work for the council could be treated as periods of employment under the relevant statutory provisions (under the Employment Right Act 1996 (“ ERA ”)). This was sufficient to establish the required continuity of employment for Mrs Prater to have the relevant employment rights she claimed she had. 171. The Court of Appeal set out, at [21], that the tribunal based their conclusion that the mutuality test was satisfied on the fact that the teacher was committed to teaching a pupil for as long as was necessary under an open ended arrangement as follows (at [14] of their decision): “…..having agreed to take on a pupil the claimant regarded herself as committed to deliver teaching to that pupil for as long as was necessary or until the arrangement was brought to an end for particular reasons. The respondents had a similar view of the situation. The matter was subject to regular review, as might have been expected, but was not re-negotiated on a week by week or month by month basis. It simply rolled on for as long as was necessary…...” 172. The passage cited included the tribunal’s comment that there was an important difference between the teacher’s situation and that of the individuals in the cases of Carmichael and Clark ; in those cases “the periods of work were short and known to be so from the outset” whereas in the teacher’s case “the arrangement was very much more open-ended…” 173. At [39] and [40] Mummery LJ agreed with the tribunal’s conclusion. He thought it clear that, had Mrs Prater been engaged to teach the pupils in a class, collectively or individually, at school under a single continuous contract to teach, she would have been employed under a contract of service. He said that it made no difference to the legal position that she was engaged to teach them out of school on an individual basis under a number of separate contracts running concurrently or successively nor that: “… after the end of each engagement, the Council was under no obligation to offer her another teaching engagement or that she was under no obligation to accept one. The important point is that, once a contract was entered into and while that contract continued, she was under an obligation to teach the pupil and the Council was under an obligation to pay her for teaching the pupil made available to her by the Council under that contract . That was all that was legally necessary to support the finding that each individual teaching engagement was a contract of service. Section 212 took care of the gaps between the individual contracts and secured continuity of employment for the purposes of the 1996 Act.”

“whilst the fact that there is no umbrella contract does not preclude the worker being employed under a contract of employment when actually carrying out an engagement, the fact that a worker only works casually and intermittently for an employer may, depending on the facts, justify an inference that when he or she does work it is to provide services as an independent contractor rather than as an employee…..” (2) In Windle the question was whether individuals who provided interpreter services were appointed under a contract personally to do work. Underhill LJ held, at [23], that the employment tribunal had not misdirected itself in holding that the absence of an umbrella agreement was a relevant factor in assessing the nature of short-term assignments: “….the ultimate question must be the nature of the relationship during the period that the work is being done. But it does not follow that the absence of mutuality of obligation outside that period may not influence, or shed light on, the character of the relationship within it. It seems to me a matter of common sense and common experience that the fact that a person supplying services is only doing so on an assignment-by-assignment basis may tend to indicate a degree of independence, or lack of subordination, in the relationship while at work which is incompatible with employee status even in the extended sense. Of course it will not always do so, nor did the ET so suggest. Its relevance will depend on the particular facts of the case; but to exclude consideration of it in limine runs counter to the repeated message of the authorities that it is necessary to consider all the circumstances.” 177. In Weight Watchers , in considering the mutuality test at [30] to [32], Briggs LJ summarised the position as established in the cases as being that arrangements may, at least in theory, fall into three categories: (a) “a single over-arching or umbrella contract containing all the necessary provisions, with no separate contracts for each period (or piece) of work”, (b) “a series of discrete contracts, one for each period of work, but no over-arching or umbrella contract” or (c) a “hybrid, class… of an over-arching contract in relation to certain matters, supplemented by discrete contracts for each period of work”. 178. He said that in the hybrid case, depending on the nature of the dispute, it may be “sufficient if either the over-arching contract or the discrete contracts are contracts of employment”

“the requisite irreducible minimum of mutual work-related obligation subsists throughout each relevant discrete contract, not merely during the potentially shorter period when the contracted work is actually being done”

“In some contexts the degree of control exercised may be very important in deciding whether someone is an employee or servant, but in the case of a senior lecturer at a college of further education, more particularly one who like the taxpayer came into teaching from active work as a singer, it is not surprising to find that he was given a very wide degree of latitude in the organisation of his work and time.” 183. In Montgomery v Johnson Underwood Ltd , at [19], Buckley LJ noted that in Ready Mixed Concrete MacKenna J had “well in mind that the early legal concept of control as including control over how the work should be done was relevant but not essential”

“some sufficient framework of control must surely exist. A contractual relationship concerning work to be carried out in which the one party has no control over the other could not sensibly be called a contract of employment.” 184. He noted that MacKenna J cited a passage from the judgment of Dixon J in Humberstone v Northern Timber Mills (1949) 79 CLR 389 from which he referred to the first few lines: “The question is not whether in practice the work was in fact done subject to a direction and control exercised by any actual supervision or whether any actual supervision was possible but whether ultimate authority over the man in the performance of his work resided in the employer so that he was subject to the latter’s order and directions.” 185. He continued, at [23], that as society and the nature and manner of carrying out employment continues to develop, so will the court’s view of the nature and extent of “mutual obligations” and “control”

“ The key question is whether there is, to a sufficient degree, a contractual right of control over the worker. The key question is not whether in practice the worker has day-to-day control of his own work. ” 187. He expanded on this, at [41] and [42], as follows: “….in modern conditions many workers - especially the professional and skilled - have very substantial autonomy in the work they do, yet they are still employees. But this has, I think, always been the case…There would be concerning what was, after all, their property. It does not follow that, because an absentee master has entrusted day to day control to such retainers, he has divested himself of the contractual right to give instructions to them…. …all aspects of control are relevant to this question. It was once thought that for a contract of employment to exist the master must be empowered to direct not only what is to be done but also the manner in which it is to be done. However, many kinds of employee - such as the surgeon, the captain and the footballer discussed by Somervell LJ in [ Cassidy v Ministry of Health ] at 579 - are engaged to exercise their own judgment as to how their work should be done.” 188. He concluded that on the facts of the case, whilst the individuals had substantial day to day responsibility, the owners retained a sufficient right of control. Essentially the Court of Appeal agreed with the EAT on the control point in White and another v Troutbeck SA [2013] EWCA 1171 (see [41]). 189. HMRC also referred to (a) Various Claimants v Catholic Child Welfare Society & Ors [2012] UKSC 56 where it was held, at [36], that the significance of control is that the employer can direct what the employee does, not necessarily how he does it and (b) E v English Province of Our Lady of Charity [2012] EWCA Civ 938 where, at [76], Ward LJ said that the question of control is not merely about the legal power to control, but that it should be viewed more in terms of accountability and supervision by a superior. That was said in the context of vicarious liability of the Church for sexual abuse by priests. In my view Ward LJ was not suggesting here that the legal power to control was less important. 190. Mr Maas referred to Matthews and another v HMRC [2012] UKUT 229 (TCC) . In that case the Upper Tribunal upheld the tribunal’s decision that two entertainers who provided entertainment on various cruises were engaged under contracts for services with the various cruise lines they contracted with. The Upper Tribunal recorded that the tribunal’s findings included (a) that on average the length and number of the engagements was 4 and 13 days and 38 and 16 per year respectively (b) the cruise line expected the highest standards of behaviour, (c) the appellants complied with the directions of the cruise director (for example, as regards some aspects of content of their act, timing and taking part in additional activities) and (d) they were treated more like crew than passengers and were, for example, expected not to occupy a bar stool if a passenger was standing, and not to occupy places in the hot tub when passengers were waiting and were expected to assist passengers finding their way round the ship. 191. The Upper Tribunal set out that, at [12] of its decision, the tribunal held that the level of control was the determining factor on the basis that “much of this is required by the context of a cruise ship” and it was: “to be expected that the staff will be closely controlled so as to achieve the cruise line’s objective because the staff are in the public eye at all times. This factor seems to us to have less bearing on the employment status of the staff than might be the case if the context were different. It is not the case that self-employed have complete freedom over what they do. An actor can discuss points of interpretation with the director as an equal but in the end the director’s wishes will prevail....” 192. At [13] the tribunal held that the appellants did not have a series of “posts” but earned their living under a series of separate engagements in a similar way to an actor as in Davies v Braithwaite . They concluded, at [14], that in this context it was right to give more weight to this point than to control. In the Upper Tribunal, in rejecting the argument that the tribunal gave insufficient weight to control, Mann J said, at [18], that the conclusion on control was “entirely justifiable”: “….the requirement of a certain degree of behaviour when “off duty” and not performing is not control over the employment activities and the performer. It is a degree of control which is required because the performers are part of a community confined on a ship for days on end and in which the ship has its own standards. It is not really related to the engagement as a performer at all. The requirement to comply with the ship’s regulations is probably a requirement imposed on all people on the ship; crew, passengers, entertainers and all others.”

“ If the actual contractual arrangements between the parties do include statements of intention, they should in my view be taken into account, and in a suitable case there may be material which would justify the inclusion of such a statement in the hypothetical contract. Even then, however, the weight to be attached to such a hypothetical statement would in my view normally be minimal, although I do not rule out the possibility that there may be borderline cases where it could be of real assistance.”

“ It is often easy to recognise a contract of service when you see it but difficult to say where the difference lies. A ship’s master, a chauffeur and a reporter on the staff of a newspaper are all employed under a contract of service; but a ship’s pilot, a taxi-man and a newspaper contributor are employed under a contract for services. ” 196. In Mr Maas view’ Mr Holmes is in the same position as a newspaper contributor, not a reporter. Mr Maas noted that Mr Holmes carries on many of the activities of his profession as a broadcaster in his own name and is taxed on such income as a person carrying on a profession. Had he entered into a personal contract with ITV, he would have done so as part of his self-employment. In his view, the decisions in Davies v Brathwaite and Hall v Lorimer show that individual engagements have to be looked at in the context of the worker’s business activities as a whole; what at first sight might appear to be an employment, may simply be an incident of the worker’s overall professional activities. 197. On the control test, he noted that every contract for services has an element of control. The question is whether ITV could control Mr Holmes in a sufficient degree as to make ITV his master. If a person engages a painter to paint his house, he determines where the work is to be carried out, when it is to be done, what colour to use, how many coats of paint and many other things. Although in a sense these are matters of control, they are in reality simply the framework within which the service is to be performed. 198. Mr Maas said that the fact that ITV had greater bargaining power did not mean that it had dictated the contractual terms between the parties. Mr Holmes nevertheless had a choice but as the weaker party he chose to contract on that basis notwithstanding that he may not have liked some of the terms. That one party complies with agreed terms does not demonstrate an exercise of control by the other party. In complying, the party is simply performing mutually agreed tasks. Control such as to make ITV master must comprise control over the performance of the duties themselves; setting the contractual framework within which the duties are to be performed is not control over their performance. 199. Mr Maas continued that the essence of the contract with ITV is that Mr Holmes is required to attend ITV’s studio at a specific time and to participate in the show at that time. The main service he is engaged to provide does not begin until he goes on air. It is, therefore, unrealistic to say that as ITV choose the time and place, so they must control Mr Holmes. The nature of the service to be provided under the contractually agreed terms determines when and where it is to be provided. 200. Mr Maas said that ITV does not have control over Mr Homes of the required kind by virtue of the facts that This Morning is its show, ITV decides (amongst other things) what to include, the order in which items are broadcast, what guests to invite on the show and when to have advertising breaks. The role of Mr Holmes is to take ITV’s ingredients and create an entertainment from them. This situation is akin to that where a person hires a chef to prepare a meal using ingredients the hirer provides. The chef is not hired to provide the meal but to cook the meal. The hirer can legitimately complain to him about the cooking but not about the ingredients. In the same way as a chef may try to alter some of the ingredients he is given, Mr Holmes may tell ITV if he does not feel that the “ingredients” they put forward for the programme can be made into an entertainment. However, the fact that ITV may reject his suggestions does not demonstrate control of the required kind; that is not control over what Mr Holmes is engaged to do. Whatever persuasion he seeks to exert with the show’s producer over the show’s “ingredients” is irrelevant to that question. 201. Mr Maas referred to Lord Denning’s comments in Bank voor Handel en Scheepvaart NV v Slatford , that, “the test of being a servant does not rest nowadays on submission to orders; it depends on whether the person is part and parcel of the organisation”

“The Crown’s representative suggests that the production company has extensive control over Mr Lorimer. It dictates the hours to be worked, where he shall work, the date he shall work. He has no discretion in these matters … I cannot see that control of the kind adumbrated helps very much towards solving the problem. If you accept an engagement for your services as a vision mixer, you must be provided with details of date, time and place and of the period of time you are likely to be required. If you are part of a team to produce a show, it is inevitable that someone must organise it… In the production of a play, you must pay attention to the stage directions or to the producer’s directions. That applies to the leading actors and actresses, but they do not for that reason become “employees”

“ … On the other hand if their relationship is ambiguous and is capable of being one or the other, then the parties can remove that ambiguity by the very agreement itself which they make with one another. The agreement itself then becomes the best material from which to gather the true legal relationship between them.” 207. Finally Mr Maas made a number of submissions on the contractual terms: (1) It would not be necessary to include in an employment contract requirements such as those for RWG to procure that Mr Holmes worked on such dates as may be agreed, for Mr Holmes to be as flexible as possible and to provide his services in a first class manner in full and willing cooperation with requests made. (2) Mr Holmes was required to provide creative input and to promote the show but that it was as much in his interests and those of ITV for him to do so. In his view this says nothing about the nature of the relationship. (3) The statement that Mr Holmes participation is integral to the Programme is very odd in the context of an employment. This statement demonstrates how important the appointment was to ITV. (4) The payments to be made to RWG are referred to as fees and not salary. (5) The provisions relating to the option to renew and the assignment of copyright are not really relevant to determining the employment relationship. (6) The following terms are inconsistent with an employment relationship; the requirement for ITV to pay Mr Holmes’ travel expenses, the VAT and billing arrangement, the numerous warranties, the agreement to provide a screen credit for Mr Holmes (which is of importance to him as a self-employed presenter) and the right to suspend the contract in certain circumstances. (7) The remainder of the terms do not point towards an employment relationship. (8) There are no provisions regarding holidays, sick pay, pension or training, no references to the staff manual or to first aid or fire marshalls. 208. Mr Tolley submitted that in all the circumstances the requirements of mutual obligation and personal service and control are plainly satisfied. The other terms of the hypothetical contract (in particular, the length of each contract and the restrictions upon Mr Holmes’ outside activities) are consistent with a contract of employment; there are certainly no features inconsistent with a contract of employment. Stepping back from the detail of the contract, the picture that emerges of the hypothetical contract is one of regular, predictable and substantial part-time employment. 209. As regards the mutuality test, Mr Tolley said that the fact that Mr Holmes was engaged under a series of contracts and at the end of each one there was no obligation to offer further work (albeit that ITV did have an exclusive option to enter into a further contract for the provision of Mr Holmes’ services on substantially the same terms) is not a relevant consideration (referring to the Larkstar case). In his view, it is in any event sufficient that there was mutuality of obligation during the term of each contract on the basis of the decision in Island Consultants Ltd . 210. He continued that ITV had a sufficient contractual right of control over what Mr Holmes did when performing his services and when and where he provided them, to indicate an employment relationship. As regards the manner of the provision of his services, in his view it suffices that, to the extent practically possible in a live broadcast environment, ITV had the contractual right to control how Mr Holmes performs his duties, even if in practice that right may not be capable of being enforced until after a programme had finished (and notwithstanding that the right was not normally enforced in practice because it did not need to be). 211. Mr Tolley noted that HMRC do not question Mr Holmes’ talents as a presenter or that when presenting, Mr Holmes had to use his individual judgment, for example, as to what to say when conducting live interviews. Given the practical realities of a live broadcast environment there is no sensible means by which ITV could determine the words that Mr Holmes would say before he said them. However, it is perfectly feasible for such a skilled person to be an employee. As the examples of the surgeon and footballer given in the case law demonstrate, a practical inability to control the decisions of a person at the moment of delivery of the skilled work is not inconsistent with employment. Indeed, the limits of ITV’s practical control in respect of Mr Holmes at the point of delivery are the same as they would be in relation to an employed presenter. If this prevented a person being an employee, it would simply not be possible for a presenter to be an employee which cannot be the case. 212. Mr Tolley submitted that what matters is where the right of control lies and not whether that right is in fact enforced (see Autoclenz ) and whether there is a sufficient framework of control. He said that the right of control would undoubtedly lie with ITV under the hypothetical contract. The actual contracts contained express clauses granting editorial control to ITV and requiring RWG to procure that Mr Holmes would cooperate with instructions from ITV. Such clauses are consistent with ITV’s need to control its output in order to comply with Ofcom’s guidelines. 213. Mr Holmes is simply incorrect, as a matter of contract, to say that he is “answerable to no one but myself”, and to imply that he has complete control over the show. No doubt ITV produces This Morning in a spirit of collaboration and avoiding conflict where possible and may often listen to the suggestions of Mr Holmes in view of his experience. However, as ITV is ultimately responsible for the output, it necessarily has the right to reject any editorial suggestions made by Mr Holmes as to which stories to run or people to interview. 214. Moreover, the work that Mr Holmes did was in the context of a team environment in which the presenter is only one part, albeit an important part and the face to the public. Mr Holmes was not producing by himself a “thing” or an “output”, but rather providing his personal service to ITV to play his part in delivering the show. The contention that success and ratings can be linked to Mr Holmes’ participation in the show, even if accepted in full, does not prevent him from being an employee. 215. Mr Tolley noted that Mr Holmes stated that he is available to work for all print and broadcast outlets and does so if the projects and conditions are right. RWG did provide Mr Holmes’ services as a presenter to other broadcasters during the relevant tax years (although the contract for This Morning was RWG’s main source of income). However, the carrying out of such other work was subject always to the requirement for Mr Holmes to seek ITV’s permission to enter into new Commercial Activities. Mr Holmes was also subject to a number of other restrictions on his activities. 216. Further, even if Mr Holmes would be regarded as self-employed when working on one-off shows through RWG, his long-term engagement for regular work on This Morning lacked any of the normal indicia of self-employment. In that context, Mr Tolley noted that one of the factors to be taken into account in determining whether a person is in business on his own account is whether he takes financial risk in the sense of the ability to make a loss or earn a profit from how the work is performed. He referred to Global Plant Ltd v Secretary of State for Social Security [1972] 1 QB 139 where Lord Widgery held, at 152, that he thought that what Cooke J had in mind was that if a man agrees to perform an operation for a fixed sum and thus stands to lose if the work is delayed, and to profit if it is done quickly, on the face of it he appears to be an independent contractor working under a contract for services. 217. Mr Tolley said that in this case, however, there was no means for RWG to increase its profit from this engagement, nor was there any realistic possibility of making a loss; there was no requirement to invest in equipment or staff; and there was no (or no significant) variability in the amount of work to be provided and paid for. Mr Holmes claimed expenses from ITV and had a clothes allowance and was covered by ITV’s insurance. 218. Mr Tolley noted that Mr Holmes’ contentions on control are very similar to those advanced by Ms Christa Ackroyd in Christa Ackroyd Media Limited v HMRC [2018] UKFTT 69 (TC) . However, in that case, the tribunal found that the BBC retained the contractual right of control, consistent with employment (see [168]) notwithstanding that the tribunal accepted her contentions as to the importance of her role and the degree of autonomy she had. 219. Mr Tolley said that the circumstances in this case are not at all akin to those applicable to Mr Lorimer in Hall v Lorimer . Mr Holmes did not enter into a series of short engagements with ITV as regards This Morning; he entered into a series of contracts (which were in fact renewed) for a minimum number of appearances on This Morning in the contracted period. Whilst there was no guarantee that the contracts would be renewed, it is clear from Lee Ting Sang that the risk of finding further work is simply one faced by all casual employees. It is clear from Fall v Hitchen (as referred to with approval by Nolan LJ in Hall v Lorimer ) that the fact that a skilled professional, such as a journalist and presenter, may be regarded as self-employed as regards some of his engagements does not necessarily of itself mean that another particular engagement forms part of that self-employment business if as a matter of fact that engagement has the hallmarks of employment. In this case, for the reasons set out above, Mr Holmes’ substantial and regular work for ITV on This Morning plainly constitutes a part time employment. In any event, it is not clear that Mr Holmes was operating on a self-employed basis as regards his other main activity, in presenting the news for Sky. 220. Mr Tolley continued that Mr Maas’ views on the application of the control test are wholly out of kilter with the case law. It is clear from the cases that it is the very essence of the test that whether a person has control over the individual of the required kind for there to be an employment relationship is to be determined from the written terms of the contract. It cannot simply be asserted that provisions on control are meaningless because the parties are merely acting in accordance with agreed terms. As regards the example of the painter or the chef, those are situations where a there is a different form of contracting arrangement, namely, for the production of the finished product (in the form of the painted room or the meal). In this case, as noted, Mr Holmes was not engaged to provide the output of the programme but to provide his services in playing his part in producing that content as part of a team. Mr Maas has simply not addressed HMRC’s points on the control test in the context of skilled professionals as set out above. 221. Mr Tolley asserted that the “part and parcel” test provides little meaningful guidance in this context (referring to the comments of MacKenna J on the difficulties of applying the test). A person can have several employments even though he is not part and parcel of any one organisation. 222. Finally, as regards the particular terms of the contract which Mr Maas referred to, Mr Tolley submitted that the final test set out in Ready Mixed Concrete is a negative one (as acknowledged in that case and Weight Watchers ). It is a case of examining whether there are any terms which are inconsistent with employment status. In his view, that is plainly not the case. He said that it is not at all uncommon in a modern working environment for employers to operate flexibly and on a collaborative basis and terms suggesting such an approach are not out of kilter with an employment relationship. He did not think that the absence of terms relating to benefits (such as holiday and sick pay) was relevant (as set out in further detail in the conclusions below). In his view the assumed contracts would not contain VAT and invoicing provisions corresponding to those in the actual agreements; these provisions are peculiar to the fact that the actual agreements were between two companies on the basis that RWG provided services to ITV which attracted VAT. Application of employment/self-employment test 223. On the basis of the caselaw set out above, I have concluded that there was sufficient mutuality and at least a sufficient framework of control to place the assumed relationship between ITV and Mr Holmes in the employment field. On that basis and, having regard to all other relevant factors, my view is that overall, throughout all relevant tax years, the assumed relationship between ITV and Mr Holmes was one of an employment rather than self-employment. For convenience, in these conclusions, I refer to the assumed contracts as though they were actually in place between ITV and Mr Holmes. Except where stated otherwise, references to the terms of the actual agreements are to those terms as they apply under the assumed contracts. Mutuality of obligation 224. As set out in Cotswold , “mutuality of obligation” may be used in different senses and “it is important to know precisely what is being considered under that label and for what purpose”