In June 2018, the Pimlico Plumbers case reached the Supreme Court and the claimant, Gary Smith was determined to be a “worker” and not self-employed and therefore he was entitled to the protections worker status provides.
The facts of the case…
Gary Smith had worked with Pimlico Plumbers (“PP”) for six years before he stopped work due to ill health. At the employment Tribunal, PP relied on the contract between Gary Smith and PP which stated that Smith was an independent contractor and there was no mutuality of obligation between the parties. PP said they had no requirement to provide work and Smith had no obligation to accept the work – mutuality of obligation is one of the three key tests for employment status and this also applies for IR35. PP also stated that there was no personal service requirement and that Smith could appoint another plumber in his place – again, the right to send a substitute is a key factor for IR35.
The Employment Tribunal rejected these arguments and stated that Smith was a “worker” with workers rights.
The Supreme Court decided that the Employment Tribunal was entitled to reach that conclusion based on all the facts. It appears the right to send a substitute was not unfettered (i.e. there were a number of restrictions placed on this right, more than just the substitute should be a plumber with similar skills and experience).
The Supreme Court has stated that this case is highly fact-sensitive and therefore no new guidance has been issued to the lower tribunals.
What does this mean for IR35?
It has confirmed the key tests on the contract are personal service, control and mutuality of obligation. In tax there is no concept of “worker” and so this status falls somewhere between the only tax options of “employee” or “self-employed”. As this was a very fact driven case this should not become a defining case for IR35
Clearways Accountants are registered with IPSE and have completed extra training in IR35 contract reviews. All clients of Clearways Accountants can ask for a contract review.