CPA Bulletin

As recently reported in the media, a plumber who had been engaged as a self-employed contractor by a London firm, was in fact deemed to have ‘worker’ status as decided by the Supreme Court. In a unanimous decision, the court found that as a worker, Mr Gary Smith came under: • The 1996 Employment Rights Act (ERA) - where he was entitled to bring a claim against Pimlico Plumbers (PP) for unlawful deduction from wages; and the, • The 1998 Working Time Regulations (WTR) - where he was entitled to a period of paid annual leave. The court also upheld a claim by Mr Smith that he was ‘employed’ by PP as defined by the 2010 Equality Act, which entitles him to bring a claim against the company for disability discrimination and failure to make reasonable adjustments. He was not, however, an ‘employee’ engaged under a contract of service as defined by the ERA, which means he was not entitled to bring an unfair dismissal claim against PP. Mr Smith signed an agreement in 2005, and an updated version in 2009, to provide plumbing work on behalf of PP. This agreement was in force until he was dismissed following a heart attack in May 2011. The agreement, among other things, required Mr Smith: • To work a minimum number of hours over a five-day week, and to keep himself available for work even if no work was available. • To wear a uniform with a Pimlico logo. • To rent a Pimlico branded van. In addition, he was bound by certain non-compete clauses should he cease to work for PP or go to work for a competitor. The Supreme Court felt the relationship between PP and Mr Smith were unfair. Although the circumstances surrounding this case are extreme, it does give a warning to all Members who may ‘employ’ individuals on a ‘self-employed’ basis. If you are a company which follows this practice, then it might be prudent to review the contractual relationship between you and the individual to avoid being caught out as Pimlico Plumbers were. LEGAL: 3 38 CPA Bulletin > August 2018 www.cpa.uk.net The Supreme Court confirmed the decision of the Court of Appeal that HM Revenue & Customs (HMRC) did indeed have the right to cancel a company’s gross payment status, - the Construction Industry Scheme (CIS) -, without considering whether its removal would have a detrimental effect on the company. The reason that the company - JP Whitter (Water Well Engineers) Limited -, had had its CIS gross payment registration cancelled by HMRC, was the fact that the company had failed to pay the due taxes on the appropriate date. The legislation surrounding CIS provides that HMRC “may” cancel a person’s or organisation’s registration for gross payment “if it appears to them” that various conditions have not been met. The company initially appealed to HMRC claiming that the loss of the CIS status could lead to a significant reduction in company turnover and a significant loss of staff. The First-tier Tribunal decided in favour of the company. On appeal by HMRC, the Upper Tribunal and the Court of Appeal both decided in favour of HMRC, confirming that HMRC had no duty to take into account matters outside the CIS regime, which could affect the company. The case is a reminder for those Members who may hold CIS status, to ensure all requirements imposed by HMRC are met; otherwise there is a possibility that HMRC could withdraw it. ’Self-employed’ plumber deemed a Worker HMRC can withdraw Company’s CIS Status