• HMRC changed a contractor’s contract without notification

  • HMRC didn’t grant the contractor agency worker rights, namely holiday pay

  • Out of court settlement agrees to pay £4200

Susan Winchester of SJW Marketing Solutions successfully claimed £4200 in respect of holiday pay rights from HMRC under the Agency Workers Regulations.

Susan had been working on marketing projects for HMRC for over a year. On the introduction of the amendment to the IR35 legislation, HMRC identified her contract as being within IR35 and obliged her to be payrolled by an umbrella company via an agency, with no right of appeal.

Reporting on the case does not identify how the umbrella company decided Susan’s employment status but it appears that HMRC continued to pay the same contract rate to the agency as they had originally paid to her PSC direct.  With the issue being over holiday pay, presumably, she was contracted in a self-employed capacity either individually or via her PSC.  In this situation, the contract sum would have had to account for the agency margin, umbrella company margin, tax and National Insurance costs (including the amount deductible for employer’s NI).

The association of independent professionals and the self employed (IPSE) CEO Chris Bryce stated: “When HMRC forced Susan onto an agency payroll, with no opportunity to appeal, they thought they could wash their hands clean of any repercussions.” “Susan’s case sends a very clear message to clients, that if you are going to treat contractors like workers, then you’ve got to give them worker entitlements.”

The case highlights a flaw where workers are classed as inside of IR35 but are not given worker/ employment rights. This is possible as the requirements to be a worker under tax legislation and employment legislation are different. IPSE are calling for any contractors who are classed as workers for tax purposes to be given worker rights such as holiday pay.

 

Minden U.K. Limited use Aspire Business Partnership LLP. This firm provide Minden U.K. Ltd with practical and commercially sound advice in relation to all aspects of compliance, business strategy and conflict resolution. Original article can be found on Aspire’s website:

https://www.aspirepartnership.co.uk/News/3199/hmrc-contractor-successfully-claims-for-holiday-pay