Feature Legal — 15 October 2018

The outcome of a recent high-profile court case concerning the employment status of a plumber should make firms wary of how they define the status of those who work for them, local accountancy firm Newby Castleman is warning.   

 

Kirsty Horobin, Tax Consultant for Newby Castleman

The Supreme Court case, which concerned Gary Smith, who had worked for Pimlico Plumbers in London for six years before suffering a heart attack, ruled that Mr Smith was a ‘worker’ for the company and was therefore entitled to workers’ rights such as holiday and sick pay, despite paying self-employed tax and being VAT registered.

With legal experts hailing the case as setting an important precedent in British employment law, Leicestershire accountants Newby Castleman are drawing attention to the potential repercussions for businesses and those who do work for them.

Kirsty Horobin, Tax Consultant for Newby Castleman, said, “For tax purposes, a person is either an employee or self-employed, however, in employment law there is the additional concept of ‘worker’. If somebody falls into the category of ‘worker’ for employment law purposes they are usually treated as being self-employed for tax purposes.

“The Pimlico Plumbers case has resulted in a degree of uncertainty being thrown up around the status of those working in the gig economy. With this increasingly common concept of ‘worker’ in addition to the already confusing IR35 legislation, businesses need to be certain of their own status and of those who do work for them.”

HMRC has recently undertaken a consultation on employment status. One consideration is whether it is possible to have a single test for employment law and tax status. Another consideration is whether a definition of self-employment needs to be formally legislated.

Kirsty concluded: “Employment status is a hot topic at the moment with lots of media attention. Hopefully the consultation results will seek to provide clarity for businesses and those individuals who fall in between the definition of employed and self-employed.

“In the meantime I would urge anyone with concerns about how it will affect the way they are taxed to seek professional advice.”

Newby Castleman is one of the Midlands’ leading independent accountancy firms, with offices in Leicester and Loughborough. It offers a range of specialist financial services, business and tax advice for individuals and businesses. For further information, telephone the Leicester office on 0116 254 9262, the Loughborough office on 01509 263500 or visit the website at www.newbycastleman.co.uk.

 

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