In George Mantides Ltd v HMRC [2019] TC07202 the FTT reviewed the services of a hospital locum for the purposes IR35 and decided on a different outcome for each of two hospital contracts.

  • Mr Mantides is a urologist and in 2013 was supplying locum services to Royal Berkshire Hospital (‘RBH’) and Medway Maritime Hospital (‘MMH’) via his personal service company
  • His work consisted of conducting outpatient clinics, procedures and minor operations. At RBH he also undertook a small amount of on-call duty
  • HMRC determined that the Employment intermediaries legislation, 'IR35' applied. It issued PAYE and class 1 National Insurance contributions (NIC) assessments under PAYE Regulation 80 and section 8 of the Social Security Contribution (Transfer of Functions etc) Act 1999.

Under the term of IR35 it is necessary to consider the terms of a hypothetical contract between the worker and the end client: i.e. if Mr Mantides had been directly engaged by each hospital would he be employed or self employed?

The FTT considered the facts of the case and formed a hypothetical contract with the following provisions:

Hypothetical contract provision

RBH

MMH

Term

Fixed

Fixed

Termination

At least one week's notice on either side

One day’s notice on each side

Personal services

Yes

Yes

Substitution

No: no right to provide another person

Yes: after consultation with the hospital

Notification of duties

By weekly rota

By weekly rota

Working hours

10 x half day sessions per week

10 x half day sessions per week

Mutuality of obligation

RBH would agree to use reasonable endeavours to provide 10 half hour sessions.

With consent of RBH he could take holidays and miss occasional sessions.

No obligation by MMH to provide, or try to provide, any sessions in a week

Pay

Agreed rates per hour worked

Agreed rates per hour worked

Integration

Required to attend morbidity and mortality meetings

Required to attend morbidity and mortality meetings

Holiday pay, sickness and benefits

No entitlement

No entitlement

Travel

 

Reimbursed for travel around sites

 

Deciders for IR35

After reviewing the facts of each hypothetical engagement the FTT concluded that if Mr Mandes had worked directly for RBH he would have been an employee however he would have been self employed in working for MMH.

Indicator

RBH

MMH

Personal service/substitution

Employment

Self employment

Control

Not enough to provide a strong indication of employment

 

Mutuality

Employment

Self employment

Substitution

Employment

Self employment

 

Comment

The combination of a lack of notice period, the right of substitution and the lack of Mutuality of Obligation confirm self employment. HMRC have still scope to appeal the decision, if they disagree. Given the cost of doing that it would be bad value for the taxpayer and as this is a FTT decision, no legal precidents were created.

A read over the full decision shows (if any evidence was needed) how difficult it can be to self-assess IR35.

The Off-payroll working rules now trump IR35 and apply to:

  • Public sector engagements from 6 April 2019
  • Private sector engagements from 6 April 2020

Public sector employers such as RBH and MMH are now steered by HMRC to use its CEST 'Check Employment Status for Tax' this has received criticism for not considering mutuality.

It is would be interesting to know how Mr Mandes has been assessed if the CEST was applied to this case. Do let us know its results if you decide to work through it!

Our practical tax guides on this topic

Employment status

Employment intermediaries legislation, 'IR35'

Mutuality of Obligation

Off-payroll working

Personal service companies & tax

External links

George Mantides Ltd v HMRC [2019] TC07202

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