CASTLE CONSTRUCTION (CHESTERFIELD) LTD v REVENUE & CUSTOMS COMMISSIONERS (2008)

Sp Comm (Howard M Nowlan (Chairman)) 3/12/2008

TAX - CONSTRUCTION LAW - EMPLOYMENT

BUILDERS : EMPLOYEES : INCOME TAX : NATIONAL INSURANCE CONTRIBUTIONS : SELF-EMPLOYED WORKERS : SUB-CONTRACTORS : BRICKLAYERS' STATUS AS EMPLOYEES OR SELF-EMPLOYED WORKERS : TESTS TO DETERMINE STATUS

Bricklayers and scaffolders, who had a trade and skill which underlay any of their particular engagements, and who worked flexible hours using mainly their own tools and were only paid for the hours they worked, ere self-employed workers.

The appellant building company (C) appealed against the respondent Revenue's decision that, for the purposes of income tax and national insurance contributions, its workers were employees rather than self-employed sub-contractors.

C's workers, who were mainly bricklayers, were paid only for hours worked and not for weather-related stoppages, holidays or illness.

Because employee and employer national insurance contributions were not deducted, their hourly rate paid was considerably higher than if they had been full-time employees doing the same work, and that extra pay had to compensate for their consequent loss of state sick pay, redundancy benefits and SERPS benefits.

HELD: There was no single satisfactory test governing the question of whether a worker was an employee or self-employed.

There were, however, a number of pointers which should all be considered before standing back and looking at the overall picture, Hall (Inspector of Taxes) v Lorimer (1994) 1 WLR 209 CA (Civ Div) applied.

Those pointers which might indicate that a worker had a contract of employment were: if there was mutuality of obligation; if he agreed that for a wage or other remuneration he would provide his own work and skill in the performance of some service for his master and that he would be subject to the other's control, and the other provisions of the contract were consistent with its being a contract of service; if he was not required to procure someone else to stand in for him; if he was not conducting a business on his own account; and if that was the parties' intention.

In the instant case, a number of pointers indicated that the bricklayers were employees: they only supplied their skill and work; they only provided their hand tools; some or most might work fairly regular hours; some might continue under contract with C for fairly long periods; somebody could certainly require them to correct or replace faulty work; and they also failed the "own business" test in many respects, at least when that was applied in a traditional manner.

However, C had rightly classed the bricklayers as self-employed because they had a trade and a skill that underlay any of their particular engagements from time to time, they mainly used their own tools, there was no notice requirement, they had flexible working hours, they were paid just for the hours they worked, they had a responsibility to correct mistakes in their own time, their attractive terms were deliberately agreed and traditional in the building industry, their level of pay reflected the basis of the clearly agreed intention of both parties, there was no material control over them either by C or by the various main contractors, and C had an intermediate rather than employer role.

For similar reasons, C's scaffolders were also self-employed, Lewis (t/a MAL Scaffolding) v Revenue and Customs Commissioners (2006) STC (SCD) 253 Sp Comm applied.

Although the labourers' status was more finely balanced, they were also self-employed when they worked side by side with the bricklayers and scaffolders and worked on identical terms.

Since the foremen and supervisors worked as bricklayers and scaffolders and were engaged on precisely the same terms, they too were self-employed.

However, the fork-lift truck drivers and the lorry driver operated expensive plant owned or hired by C and were therefore subject to more control in the use of that equipment than the bricklayers and scaffolders; accordingly, notwithstanding their casual terms of engagement, they ranked as employees, Global Plant Ltd v Secretary of State for Health and Social Security (1972) 1 QB 139 QBD applied.

 

Appeal allowed in part

 

Counsel:

For the appellant: David Yates

For the respondents: David Seaman, David Weissand

 LTL 20/1/2009 (Unreported elsewhere)       

 

Document No. AC0119335

 

Source: Lawtel http://www.lawtel.co.uk , copyright acknowledged.