The status tests come with a health warning! In the same way that case law is a matter of interpretation, with HMRC often at odds with others, the same can be said of the status tests. The courts give indications of the weight they apply to particular tests but these can vary depending upon the facts of the individual case and over the years the level of importance given to particular tests can change significantly.
Each time HMRC considers status they issue form Annex A which lists the factors that HMRC currently (2007) consider relevant as follows:
- whether there is an ultimate right of control on the part of the engager over what tasks have to be done, where the services have to be performed, when they have to be performed and how they have to be performed
- whether personal service is required
- whether the worker has the right to provide a substitute or engage helpers
- who has to provide the equipment and/or materials
- whether the worker has a real risk of financial loss
- whether the worker has the opportunity to profit from sound management for example by reducing overheads and organising work effectively
- the basis of payment
- whether there are 'employee type' benefits for example sick pay, holiday pay etc
- whether the worker works exclusively for the engager
- whether the worker is part and parcel of the engagers business or organisation
- whether there is a right of dismissal by notice of a specific length
- factors personal to the worker for example, number of engagements and business organisation
- the intention of the engager and worker as regards employment status
As you will see from the section 'The case law' and how it relates to the contract, HMRC’s list does not include mutuality of obligation, a factor most specialists consider to be fundamental to status. Hence the opening health warning!
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