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Self-Employed Locum Doctor Wins IR35 Appeal Against HMRC

on Thursday, 11 July 2019.

Of two service contract with two hospitals, one was held to be that of true self-employment and outside of IR35 and the other was deemed to be an employment contract and inside of IR35.

We compare the two contracts below to show what can tip the balance inside or outside of IR35 and employment status.

Background on IR35

Since April 2017, public sector organisations that engage contractors have been responsible for determining the employment status of those contractors for the purposes of PAYE and National Insurance contributions and passing that determination on to the Employment Agency or Business that supplied them. With private sector reform expected in April 2020, IR35 is on the minds of many Employment Agencies and Businesses. In this article we examine a recent decision of the first tier tax tribunal chamber of George Mantides Ltd v HMRC (TC/2018/3736).


George Mantides (GM) was a locum urologist who provided his urology services via a personal service company (PSC) to two hospitals, the Royal Berkshire Hospital (RBH) and the Medway Maritime Hospital (MMH). During each assignment the PSC provided GMs services, which included seeing patients, ordering and reviewing x rays, undertaking minor surgical procedures and advising patients' GPs, always using premises and equipment provided by the hospitals.

HMRC had previously determined that GM was an employee of both hospitals, meaning that his PSC was liable to pay PAYE and National Insurance contributions. GM appealed to the first tier tax tribunal. The judge held that one of the contracts was that of true self-employment and outside of IR35 and the other was deemed to be an employment contract and inside of IR35.

Legal Tests

Tribunals assess whether or not, were it not for the existence of the PSC, a contract of employment would exist between the contractor and the end hirer?

The long established test to determine employment status:

  • Mutuality - is the end hirer obliged to provide work and is the induvial obliged to do that work?
  • Control - does the end hirer exercise control (or has the option to) over the induvial in relation to the work and how it's done?
  • Substitution - does the induvial have to complete the work themselves, or can they provide a substitute?
  • Inconsistency - do the other provisions of the contract suggest contract of service or contract of employment?

 Other relevant factors include:

  • Equipment - does the individual provide their own or use the end hirer's equipment?
  • Financial risk - does the induvial carry financial risk or are they guaranteed payment?
  • Is the individual part of the end hirer's organisation?
  • Termination - how much notice needs to be given to end the assignment?
  • Employment benefits and payments - does the individual receive sick pay, holiday pay and a pension?

 Comparison of the Contracts

The three material differences between the two arrangements were:

  • the right to substitute
  • provision of notice - 1 day vs 1 week
  • the obligation to provide work - MMH not obliged, whereas RBH were so obliged

 The table below shows further comparisons.


MMH contract amounted to Self-Employment

RBH contract amounted to Employment


Term & Notice

Fixed term, terminable on 1 days' notice

Fixed term, terminable on

1 weeks' notice. 6-8 weeks' notice to take leave

Employment benefits

No sick pay, holiday pay or pension

Holiday pay included in hourly pay. No sick pay or pension


Pay for hours worked - timesheet required

Pay for hours worked - Standard hours 'as per rota' - 10 half day sessions

Obligation to work

GM obliged to be available for 10 half day sessions per week

GM obliged to be available for 10 half day sessions per week

Obligation to provide work

No obligation for the hospital to provide work

The hospital to endeavour to provide 10 half day sessions per week


Some control and supervision

Some control and supervision


Substitution allowed. GM could suggest one but needed to be approved/agreed by the agency

No substitution allowed


Top Tips

Contractors providing services through a PSC, or employment businesses placing such contractors, should consider the steps below derived from this decision to assist in avoiding falling fowl of IR35:

  • ensure that there is a written contract in place setting out the arrangements between the parties
  • that any written contract reflects the reality of the relationship
  • minimum notice to terminate the arrangement
  • minimum obligation to provide work
  • allow for substitution
  • allow flexibility of hours and location

For more information, please contact Nadjia Zychowicz in the Recruitment team on 01923 919 375, or complete the form below. 


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