ESM7160 - Case Law: Hall v Lorimer
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1993 case - 66TC349
Point at IssueWhether a freelance vision mixer was engaged under a series of contracts of service or assessable under Schedule D as a person in business on his own account.
FactsThe following is a summary of the basic facts:
- In 1985, Mr Lorimer left full-time employment and became a freelance vision mixer.
- In the first 14 months he built up a list of 22 companies and in the three succeeding years the number on the list remained at about 20.
- He worked for over 800 days in the period 2 February 1985 to 5 April 1989.
- His annual number of engagements ranged between 120 and 150, the longest engagement of which was for 10 days.
- All the work was done at studios owned or rented by the production company on equipment owned or supplied by the studio company.
- Bookings were usually made on the phone to his home where he had an office, and subsequently confirmed by letter giving dates, rate of pay etc but there were no formal written conditions of engagement.
DecisionThe Court of Appeal concluded that Mr Lorimer was engaged under contracts for his services and therefore self-employed.
CommentaryThe Court of Appeal did not think it was appropriate just to apply the test or indicia set out by Cooke J. in the Market Investigations case (see
ESM7040). Nolan L.J. agreed with the views expressed by Mummery J. in the High Court where he said:
“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.”The point to be drawn from this is that, having obtained all the relevant information, the object is to stand back and determine employment status on the basis of an overall view. It is not just a question of adding up the relevant factors for and against a particular employment status. Rather what you have to do is make a subjective judgment based on your overall assessment taking account of the different weights which apply to individual factors in the particular case.
Where there are many short-term engagements, Hall v Lorimer also indicates that it is necessary to consider the personal factors that exist outside the terms of the direct contractual relationship the worker has with the engager for the specific engagement being considered. For example,
- engagements may need to be looked at in the context of the worker’s business activities as a whole including matters such as the worker’s exposure to bad debts and the amount of time and money spent on organising, obtaining, or carrying out the work
- it may be appropriate to take into account the length of the particular engagement and the number of other persons for whom similar work is performed. However, it should be remembered that Nolan L.J. accepted that “an employment properly so called is not the less an employment because it is casual rather than regular”. In some instances therefore the overall picture may point to self- employment whereas in others it may point to a single umbrella employment or a series of casual employments.
On the subject of provision of equipment it should be noted that in the High Court Mummery J stated
“The Crown’s submission emphasised two particular points. First, the fact that Mr Lorimer has not provided any of the very expensive equipment necessary for the exercise of the skill of a vision mixer. Secondly, the fact that all Mr Lorimer provided was his personal skill. These facts do undoubtedly point to a contract of service, but they are not necessarily inconsistent with a contract for services, so as to make the Special Commissioners’ decision an impossible or a perverse one.”This was contrary to the view taken by the Special Commissioner. In the Court of Appeal Nolan LJ did not comment on this aspect in his judgment.