ESM3310 – Opinions on contracts: Case studies - tax bulletin article

One of the central questions in deciding whether the new rules apply to an engagement is to establish whether the worker would have been an employee of the client if engaged directly. The HMRC published guidance on this issue in a tax bulletin article 45A dated 7 February 2000 (see www.inlandrevenue.gov.uk/IR35). This article contained three examples to illustrate the process for deciding whether an engagement is employment of self-employment.

These examples are purely illustrative. They do not indicate HMRC’s view of the employment status of particular groups of workers. However, members of the public are likely to refer to them and, in the Judicial Review of the legislation (see ESM3281), the judge refers to these examples as being helpful. The examples are:

• Gordon, an IT contractor working through his own service company whose engagement would be covered by the rules
• Henry, a consultant engineer working through his own service company whose engagement would not be covered by the rules
• Charlotte, an IT consultant working through her own service company whose engagement is on the borderline

The article is contained in Tax Bulletin 45 and the examples are repeated in full at ESM3311, ESM3312 and ESM3313.

See however the guidance at ESM3380 in relation to cases where there are several consecutive and/or simultaneous engagements with different engagers.