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HMRC internal manual

Employment Status Manual

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HM Revenue & Customs
Updated
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Procedural aspects of status cases: formal procedure in disputed cases - general

If the engager or the worker does not accept your opinion, and you have exhausted all lines of argument, and to continue with further correspondence would mean repeating yourself, then you need to consider taking steps to resolve the matter formally.

The first step is to create a tax charge and/or make a NICs decision against which the engager/worker can appeal. The Status Inspector should decide what should be done and this will depend on the circumstances of the individual case, but there are the following options to consider:

  • NICs decision on engager/worker.
  • Regulation 80 determination on engager (having first considered whether the engager has a good case for consideration by the DMB PAYE Errors Unit under Regulation 72 (Condition A) - see ESM0120).

Consider whether Regulation 72F may apply.

  • Amendment to worker’s SA returns where there is an open Section 9A enquiry.

The following guidance tells the Status Inspector what to do where formal action is required.

  • HMRC believe the correct treatment is employment.

Please refer to guidance in the Compliance Operational Guide at COG907500 for the full procedures.

  • HMRC believe the correct treatment is self-employment. 

    • make a Section 8 NICs decision, and
    • where there is an open Section 9A enquiry, inform the Section 9A caseworker of the position.

Where possible, co-ordinate work on the appeals so they can be reviewed, and if necessary litigated, together (see ARTG2010). Failure to do this could result in different reviewers or tribunals coming to a different decision on status - either reducing the charges to nil (with no charge on either party) or leading to double charges.

For further information about NICs decisions, see the online Decisions and Appeals for National Insurance Contributions and Statutory Payments Guidance (DANSP).

If in doubt on the appeals position, seek advice from Central Policy (Tax Administration Policy).