HMRC have lost a landmark case and have also been criticised for having pre-conceived ideas of employment status.

The case of MAL Scaffolding -v- HMRC was heard by the special commissioners. Mr Lewis was a sole trader and engaged 29 scaffolders and labourers on a self employed basis.  The Revenue took the view that they should have been employees and and an amount approaching £300,000 was at stake. The amounts can escalate very quickly if you have a number of workers and get their status wrong.

HMRC will be shaken by the decision as it criticised the investigating officers for having pre-conceived notions that the subcontractors were really employees, persuading themselves that they had found what they went looking for.

The case was won by the taxpayer despite the fact that there were no written contracts and despite the fact that 2 of the workers had established themselves as employees at a previous employment tribunal. The court held them to be all self employed.

As is usual with status cases, it was argued on the fundamentals of personal service (substitution), mutuality of obligations and control.

The case highlights just how important it is to stand up to the Revenue when they try to operate beyond the boundaries of what they should and the importance of getting professional advice to help put them in their place.

See the full judgement here

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