TT152: Taxman helps you lose pounds

June 30, 2010

Anyone who remembers “Fat Fighters” from the “Little Britain” show might find it difficult to treat any story involving Weight Watchers without a smile but this latest story is very serious news indeed for anyone who organises their business using a self employed workforce.

HM Revenue & Customs (“HMRC”) have recently won a tax appeals tribunal hearing which decided that 1,700 team leaders were not, as Weight Watchers had stated, self-employed but were in fact employees of the company. Not only that, but HMRC have backdated their claim 9 years. Weight Watchers are appealing to the High Court but in the meantime, their US parent company has been forced to make a provision of £24.5 million to cover the potential additional liabilities if they lose the case.

HMRC have never liked arrangements where a large workforce is treated as self-employed as such treatment saves Employers’ National Insurance and also allows more generous expenses deductions for the workers.

There is no doubt that HMRC are stepping up their campaign in this area.

They are looking at all areas of business (rumours persist that they are now targeting driving instructors) but of particular focus is the construction industry.

An astonishingly biased ‘consultative document’ was produced last year by HMRC with the title “False Self-Employment in Construction” which indicates clearly their thinking process. Their clear intention is to make it as difficult as possible for anyone working in construction to claim to be self-employed.

So what can be done?

For the construction industry it may be a question of waiting to see what new legislation will be introduced (as it almost certainly will) but for all other sectors it is vital that the contracts under which self-employed individuals are contracted are reviewed and the actual working practices examined.

A series of court cases over the years have established a number of factors which must be looked at, such as control over how and where the work is done, the right of the worker to provide a substitute to do the work, who provides materials and so on. None of the tests is conclusive on their own and each case will be looked at on its own merits.

If you have any self-employed workers, anything from the cleaner who comes in the evening up to a sales force of hundreds it would be well worth your while reviewing your arrangements.

Talk to Barnes Roffe today
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