What do Supervision, Direction and Control mean? Why are they significant in terms of employment status, agency workers and tax relief on expenses? 

This is a freeview 'At a glance' guide to Supervision, Direction or Control (SDC).

At a glance

It is necessary to consider whether a worker is under the Supervision, Direction or Control (SDC) of their client in order to determine:

  • The employment status of a worker.
  • Whether the Agency rules apply to that worker.
  • Whether, from 6 April 2016, tax relief on the costs of home to work Travel and Subsistence are restricted for workers engaged through an employment intermediary.

There is no legal definition of the meaning of SDC and its meaning has never been considered before any Tribunal or Court. The words, therefore, take their 'ordinary meaning'.

  • The exercise or the right to exercise SDC must be over the manner in which the worker's services are rendered.
  • SDC is not required over when, where or what is to be done, only over how the work is to be done.

For the purposes of the agency legislation HMRC’s guidance shows that they consider supervision, direction and control to be defined as follows:

  • Supervision over the manner in which the worker provides the services is the action or process of watching or overseeing what a person does or how something is to be done. If a person checks or has the right to check the work that the worker is doing to make sure it meets a required standard, the manner in which the worker provides the services is subject to supervision.  Supervision can involve helping the worker develop their skills and knowledge.
  • Direction over the manner in which the worker provides the services is making a worker do their work in a certain way by providing them with instructions, guidance, or advice as to how that work must be done. Someone providing direction will often coordinate how the work is done as it is being undertaken.
  • Control over the manner in which the worker provides the services is telling or instructing a worker about how they do the work. Control over how the person does work also includes someone having the power to move the person from one job to another. If someone can say 'don’t do it like that' or 'do it like this' then they have a right of control as to the manner in which a person works.

HMRC lists Examples of control for specific workers in its Employment Status Manual (ESM). The ESM only states HMRC's view, and so these examples are only illustrative.

HMRC published Guidance on 6 April 2016 which includes further examples.

Of particular note is that the new guidance shows that HMRC now consider that those who work within a regulatory environment, such as health care workers, social care workers and teachers, are subject to SDC.  This is because the manner in which they work is governed by regulations and somebody will have the right to supervise their work and check that their work complies with those standards. This was not included in previous versions of the Employment Status Manual.

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