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HMRC internal manual

Employment Status Manual

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HM Revenue & Customs
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Guide to determining status: relevant factors

In deciding whether a person is in business on his own account or working under the control of and as part of the business of another, a variety of factors are relevant. Cooke J said in Market Investigations (see ESM7040)

No exhaustive list has been compiled and perhaps no exhaustive list can be compiled of the considerations which are relevant in determining’ [whether there is a contract of employment] ‘nor can strict rules be laid down as to the relative weight which the various considerations should carry in particular cases. The most that can be said is that control will no doubt always have to be considered, although it can no longer be regarded as the sole determining factor; and that factors which may be of importance are such matters as whether the man performing the services provides his own equipment, whether he hires his own helpers, what degree of financial risk he takes, what degree of responsibility for investment and management he has, and whether and how far he has an opportunity of profiting from sound management in the performance of his task.’

Although there is no exhaustive list, the factors to be considered include the following:

  • control
  • personal service
  • equipment
  • financial risk
  • basis of payment
  • mutuality of obligation
  • holiday pay, sick pay and pension rights
  • part and parcel of the organisation
  • right to terminate a contract
  • opportunity to profit from sound management
  • personal factors
  • length of engagement
  • intention of the parties.It must be emphasised that status in not a matter to be determined by running down some form of check list or adding up the number of factors pointing toward employment and comparing that result with the number pointing toward self employment. It is a matter of evaluating the overall picture that emerges from a detailed review of all the facts. This was made clear in the recent tax case of Hall v Lorimer (see

ESM7160). In the High Court Mummery J. made the following comment which was quoted with approval by Nolan J in the Court of Appeal

In order to decide whether a person carries on business on his own account it is necessary to consider many different aspects of that person’s work activity. This is not a mechanical exercise of running through items on a check list to see whether they are present in, or absent from, a given situation. The object of the exercise is to paint a picture from the accumulation of detail. The overall effect can only be appreciated by standing back from the detailed picture which has been painted, by viewing it from a distance and by making an informed, considered, qualitative appreciation of the whole. It is a matter of evaluation of the overall effect, which is not necessarily the same as the sum total of the individual details. Not all details are of equal weight or importance in any given situation. The details may also vary in importance from one situation to another.

The process involves painting a picture in each individual case.’