In the case of George Mantides Ltd v. HMRC [2019] TC07202, a personal services company (the Company) appealed against tax and NIC assessments under the IR35 rules. The First Tier Tribunal (FTT) determined that there were sufficient differences between two engagements for the provision of services for IR35 to apply to one engagement and not the other.
The Company was providing the services of its director, George Mantides, to two hospitals – Royal Berkshire Hospital (Royal) and Medway Maritime Hospital (Medway). At both hospitals, Mr Mantides was a locum urologist. He saw patients according to a rota, ordered and reviewed x-rays, carried out minor surgical procedures and used facilities and equipment provided by the hospitals. Mr Mantides had sufficient expertise to carry out the work with minimal direct supervision and was only required to attend one regular meeting. Both engagements were for a consecutive period of three months, although both were terminated early. There were no agreed provisions for sickness, pension, holiday pay or travel expenses – other than between sites. The Company invoiced hourly and paid for professional indemnity insurance.
In its judgment, the FTT noted the following decisive factors:
- Substitutes: The Company had a written contract with Medway detailing the right to supply a suitably qualified substitute for Mr Mantides. Medway had no right of veto over this. In contrast, there was no written contract between the Company and Royal. The “Locum Booking Confirmations” provided in relation to this engagement made no mention of substitutes.
- Notice: The contract between the Company and Medway could be terminated on one day’s notice. The FTT inferred a requirement of one week’s notice from Mr Mantides’ comments about holiday absences at Royal.
- Hours: Medway was under no obligation to provide Mr Mantides with any hours. The FTT inferred (referring to the Locum Booking Confirmation documentation) that Royal would endeavour to provide Mr Mantides with 30-40 hours of work each week.
Under IR35, it is necessary to consider the terms of a hypothetical contract between the worker and the end client. The question was whether, under each of these hypothetical contracts, Mr Mantides would be considered employed by the relevant hospital or self-employed. The court held that the hypothetical contract with Royal had the characteristics of employment, and the hypothetical contract with Medway, self-employment. Consequently, the Medway contract was not caught by IR35, but the Royal contract was. This case provides an important illustration of some of the factors which will be considered by a court or tribunal in determining the scope of IR35. In this case, it worked in Medway’s favour that there was an express contract detailing the terms of engagement more specifically than the documentation detailing the relationship between the Company and Royal.
