Employed or Self Employed

In the case of Demibourne Ltd v H M Revenue & Customs (HMRC) it was held that Mr Bone, who carried out electrical, plumbing and general maintenance work for the Frensham Pond Hotel on a self employed basis over a period of 9 years, ought to have been treated as an employee.

He had submitted invoices regularly for £255 per week and had some other customers which generated a modest amount of other income.

HMRC sought from the hotel PAYE and employer’s NIC for a five year period. Mr Bone had however paid tax and national insurance as a self employed person but was outwith the time limit to claim this back.

It was recognised that there would therefore be double taxation and it was recommended that the payments already made by Mr Bone should be offset against the amount being sought from the company. It was recognised however that this was a matter for the parties to agree and was outwith the jurisdiction of the hearing.

This case is a warning to consider carefully the status of individuals who work regularly for one party on a self employed basis. If you are in any doubt about such status, please contact us for advice.