A glazing salesman who operated on a self-employed basis for almost 25 years failed to prove his Employment Status on the balance of probabilities that he was employed under a contract of service during the period in question.
The appellant first started working for a company (WCSL) in about 1990, selling window products. He generated his own sales leads, as well as receiving leads that came to the company direct. The appellant provided, and paid for, his own car and mobile telephone. WCSL provided (among other things) a computerized system for providing quotes and producing contracts, together with a laptop loaded with specialised software.
The appellant’s only remuneration was sales commission. If he gave customers a discount of over 25% of the product’s list price, his commission would be reduced. The appellant’s commission could also be reduced or clawed back if there was a problem with a job resulting from an error he made or if the customer failed to pay or canceled the job. The appellant never received holiday pay, sick pay, or pension contributions from WCSL.
During the period in question, the appellant spent approximately two days a week in WCSL’s showroom. There was an expectation, but no legal obligation, that he would spend any particular amount of time in the showroom. The appellant was required to provide his services personally and could not provide a substitute, asany substitute would not have the requisite training in respect of WCSL’s products and the credit offered through a finance company engaged by WCSL. There was also an expectation held by the appellant and WCSL, but no legal obligation, that he would only provide his services to WCSL and not to any competitors.
In early 2013, the appellant’s new adviser informed him that he may, in fact, be an employee, rather than self-employed. However, HM Revenue and Customs (HMRC) decided that the evidence for a change of status was not sufficiently clear. HMRC issued a
Decision (under SSC (TF) a 1999, s 8(1)) that it regarded the appellant as self-employed in respect of his engagement with WCSL for the period 6 April 2004 to 5 November 2015. The appellant appealed (N.B. both parties agreed that the outcome of the appeal may also affect the appellant’s liability to income tax).
The First-tier Tribunal (FTT) referred to relevant legislation and case law and considered several factors in Employment Status. The FTT did not regard this as a case where the details pointed clearly towards either employment or self-employment. There were factors which supported both conclusions.
In favour of employment, WCSL did exercise some control over the appellant’s activities; it provided equipment and support to enable the appellant to do his job; he appeared to the outside world to be an employee; there was a negligible chance of the appellant making a loss and he had to provide his services personally (i.e. He could not provide a substitute).
On the other hand, factors pointing towards self employment included that the appellant was paid on a commission -only basis; he incurred expenses, which were not reimbursed; although some control was exercised by WCSL, he was fairly free to work in the way that he wanted and there was no limit on the time that he could take off; he had no entitlement to holiday or sick pay; and he could increase his earnings by generating more of his own leads and negotiating the best possible deals.
Standing back from the detail and looking at the overall picture, the FTT considered this showed that the appellant was in business on his own account and was not an employee. However, the FTT accepted that the picture was unclear and either conclusion would be perfectly possible. Therefore, the fact that both parties intended and believed that the appellant was self -employed and operated on that basis for almost 25 years must be decisive. The appellant’s appeal was dismissed.
Whilst this case was decided on its own particular facts, the FTT’s consideration of relevant legislation and case law, and its approach to determining Employment Status, employment or self -employment (including standing back and reviewing the overall picture) means that this case may be helpful in other employment status dispute cases.
Tomlinson v Revenue and Customs [2017) UKFTT 489 (TC)