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HMRC internal manual

Employment Status Manual

Agency and temporary workers: agency legislation - provisions from 6 April 2014: supervision, direction or control example - IT consultant

Part 2, Chapter 7 Income Tax (Earnings and Pensions) Act 2003, Part 2, Chapter 7, section 44(2)(a)

Social Security (Categorisation of Earners) Regulations 1978, Schedule 1, Part 1, paragraph 2

IT consultant

Paul is a skilled IT Consultant who specialises in designing, building, and implementing websites for businesses. He obtains his work via an employment business which finds him jobs with clients. A retail clothing company ask the employment business to provide an IT specialist for a two week engagement, to do some internet-based IT work. The employment business contact Paul and as he wishes to take the engagement, arrangements are made for Paul to attend an interview with the client.

Scenario 1

Paul attends the interview where he meets the company directors who tell Paul they want him to design, build, and place onto the internet a new website for their business which will advertise and sell their products online. Discussions are held during which time Paul shows the directors his portfolio and websites he has previously created. The directors are impressed and Paul is offered the engagement, which he accepts. The Directors then tell Paul he has a completely free role to design and build the website as he sees fit, without anyone being able to intervene to instruct Paul what the website must look like or how it must be created. The only specific requirement placed on Paul is that the new website is completed, placed on-line, and activated before his engagement ends.

At his own choice, Paul works alone and decides to do some of the design work at home and some at the company’s premises, where he is provided with a desk and PC, but completely left alone to get on with and complete his work. Although the company have not asked for weekly progress reports, out of courtesy Paul decides to provide them (as this is how he normally works for his customers). Paul works alone throughout his engagement without any intervention whatsoever from the client, and finishes designing the website on the eleventh day. Paul then places the website on-line on day twelve and tells the client he will be monitoring the website’s performance for the remaining two days of his engagement, to make sure it functions correctly. The website works correctly and on day fourteen Paul’s engagement ends.

In this scenario, from the very outset Paul has been told he would be given complete freedom to decide and control how he would provide his services, without anyone being able to intervene to dictate what Paul had to do and how he must do it - and this is what happened in practice. Paul has not been subjected to (or to a right of) any supervision, direction, or control as to the manner in which he provided his services during his arrangement. The agency legislation does not apply to this scenario.

Scenario 2

The employment business tells Paul his engagement with the client will be for six days (Monday to Saturday). Paul attends an interview with the client’s Managing Director (MD) who tells Paul they require an IT specialist for the six days to assist their IT Team with various IT work; which will be arranged and overseen by Jacqueline, the company’s IT Manager. Paul is told Jacqueline will be deciding what jobs Paul will do, telling Paul how they must be done, and throughout she will be supervising Paul and instructing him as to the order in which the jobs should be done, which may change at short notice. Paul is informed that throughout, Jacqueline will be managing him and the other IT workers to make sure their assigned work are done to the required specification.

On his first day, Paul is based at the company’s trading address. Jacqueline gives Paul his first job which is to update the company’s website to display new retail products. Jacqueline gives Paul detailed information on those products, which includes photographs, descriptions, and prices. Paul is then shown how the products must be displayed on the company’s website. Jacqueline watches over Paul doing this work, making sure that Paul displays the new products correctly and the photographs and product descriptions are legible. Jacqueline tells Paul to shorten some product descriptions and delete discontinued items from the website. This task takes three days to complete, during which time Jacqueline monitors Paul’s progress throughout to ensure Paul’s work is done accurately and completed on time.

On the fourth day, Paul accompanies Jacqueline at the company’s Head Office to help her gather figures on product sales over the last six months. Paul is told to access the company’s database where he is to extract the figures for all product sales and list them on a specific spreadsheet provided in order of what products have sold the most. Jacqueline watches Paul compile the data to ensure it is listed correctly and afterwards she checks Paul’s completed spreadsheet for accuracy. This work takes Paul two days to complete, after which his contract to work for this client has ended.

In this scenario, the Company have made it clear to Paul that the IT Manager (Jacqueline) would have a right to give Paul directions and supervision as to how he must do his work. In addition, Jacqueline would have the right to control how Paul did his work by dictating how it must be done. From the very outset of this arrangement, Paul has been subject to a right of supervision, direction, or control as to the manner in which he did his work and even if that “right” not been implemented in practice (which in this case it was), the existence of that right of supervision, direction, or control as to the manner in which Paul provided his services is sufficient for the agency legislation to apply to this scenario, provided the other conditions of the legislation are also met.