The Accountants for Growth

Business Repercussions following the Uber case

Business Repercussions following the Uber case
What was the case all about?
  • Two former Uber drivers took Uber to court and successfully won the argument at the Supreme Court to be treated as workers rather than self-employed.
  • Was this to do with the present IR35 rules?
  • No – these individuals were not carrying out their work through a Personal Services Company or through partnership or Umbrella Company.
  • This would also not be caught by the new Off Payroll working legislation coming in from April 2021 for exactly the same reasons.
  • This is simply a self-employment v worker v employment status review issue.

  • Will this case affect other businesses?
  • Possibly – the case brings into focus the status of individuals and their relationship to a business. The issue is not restricted to Uber only and could impact any business using self-employed individuals.

  • What are the repercussions for a business if a status review is lost?
  • The worker/employee could claim to be paid the national minimum wage going back 6 years (5 years in Scotland).
  • The worker/employee could claim holiday pay.
  • The worker/employee could be entitled to be part of the business auto enrolment pension scheme.
  • As an employee, they may be entitled to sick pay/parental leave/redundancy pay plus the right to claim unfair dismissal.
  • As a worker, they may be entitled to protection against unlawful discrimination and for whistleblowing.
  • HMRC may issue PAYE determinations against the business to recover the PAYE tax and national insurance for the current and earlier years. HMRC are not obliged to offset the tax and NI suffered by the individual to date against that liability.
  • Subject to the nature of the work carried out by the ‘worker/employee’, there may be a VAT liability on any supply made by them.
  • What can be done for the business?
  • Carry out a status review, in each case, where the business has engaged the services of an individual on a non- worker/employee basis to ensure that the true relationship fits that criteria.

  • What should the status review look at?
  • What are the terms of the contract? Note the Courts and HMRC will still look behind the contract to see if that is truly what the arrangement is.
  • Is there a right of substitution? Who has the right to make that choice, the business or the individual?
  • Is the business obliged to provide work and is the individual obliged to carry that work out?
  • Does the individual provide their own equipment?
  • Does the individual invoice for the work?
  • Does the individual have their own business bank account?
  • Does the individual have their own website?
  • Does the individual have their own liability insurance cover?
  • Do they offer themselves out to work for other businesses or individuals?
  • Do they have other people working for them?
  • Are they registered as self-employed with HMRC?
  • Are they VAT registered?
  • To the outside world, are they seen as an integral part of your business?
  • Do they have their own desk or office space at your premises?
  • Does the business control how the work is performed by the individual?
  • Can the individual profit from doing the work? E.g. doing the job quicker or being paid more for providing better quality work.
  • Subject to the answers to those questions, one must look at the great surround and then make a status judgement.

  • Who can carry out that review?
  • We can carry out that review for you, if that is of interest to you.
  • If you wish to discuss a Status Review or other issues please do contact us.
    Covid-19 VAT Deferral New Payment Scheme (VDNPS)
    Pre Year End Tax Planning