The judgement of HMRC’s employment status challenge on Philip John Wright was released in January 2012. .If you are wondering why that name may be familiar it is because it is the fourth time the case has been heard in full at the tax tribunals to determine whether the subcontractors engaged should have been reclassified as employees:
- 12 years ago HMRC started an employment status challenge on Philip John Wright. This went on for a few years before HMRC raised assessments for the tax and national insurance due totalling £300k (excluding penalties and interest). This was appealed and in 2005 the General Commissioners ruled that the individuals were self-employed.
- HMRC subsequently appealed this however and the High Court considered in 2007 that the matter should be remitted back to the general commissioners for a full re-trial.
- HMRC then requested that it be transferred to the Special Commissioners in London rather than the General Commissions in Mr Wright’s local town which Mr Wright successfully contested. The case was however subsequently heard at the Special Commissioners in London 2009 and the individuals were deemed employees.
- Mr Wright then applied for this judgment to be set-aside on the basis that the Tribunal Service had agreed but ignored the transfer request. As a result the full case was heard for a fourth time in 2011 in which it was finally concluded – unfortunately for Mr Wright however it was concluded that the individuals were in fact employees!!
The case itself centres round whether there was sufficient control. It was considered that the lads were “labour only” and could be told by either the company or the foreman what to do and how to do it and this created a sufficient degree of control to create an employment relationship.
As a result of the on-going enquiry, the appellant lost his home, his business and according to the judgment his mental and physical health deteriorated considerably and that was even before the final judgment was released confirming his liability in excess of £300k.