Importance of the substitution clause

In HMRC v Talentcore, (2011 UKUT 423 TCC), the upper tier tribunal have made a very important decision by ruling in favour of the taxpayer on the employment status of its agency workers. They upheld the decision of the first-tier tribunal who decided that the consultants were not employees because there was no personal service”.and there was a full right of substitution between workers which meant that they were not employees. If the person contracted to do the work did not need to turn up as long as a replacement is provided, then there was no contract of service and PAYE does not apply.

In our opinion the whole issue of self employment status should be put out to consultation with a view to getting it sorted once and for all. There is enough case law and expert opinion to form a set of rules and tests to put it into statute so everyone can move forward with confidence. The business world needs certainty to allow it to trade out of this recession. The hardest hit industry is the construction industry and if this country is to recover this sector needs to move forward with confidence, with fair competition and without the threat of financial uncertainty.

If you want to discuss this case further, please call paul at a&c chartered accountants on 0161 962 1855

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