PCG Newsletter - 33/01 - 9th October, 2001
- Contract Opinion
In this issue:
- Comment on O�Murphy v HP EmploymentAppeals Tribunal
- PCG AGM & Conference
- Contract Opinion document
- Members Resolutions
- Real Life Meetings
Comment on O�Murphy v HP Employment Appeals
Tribunal
Most members will already be aware that judgement has now
been passed down for Employment Appeal Tribunal (EAT/612/01)
involving Hewlett Packard and O�Murphy. O�Murphy, who had
contracted with HP for six years, was found to be �an employee�
at the initial tribunal, but the EAT concluded that O�Murphy
was *not* an HP employee.
Kevin Miller of PCG has looked at the Judgement:
"This judgement needs careful analysis. It is well known
that Employment law and Tax law do not always see status
issues in the same light. PCG has asked Francesca Lagerberg,
senior tax consultant at the tax faculty of the Institute
of Chartered Accountants in England and Wales (and a qualified
barrister), to analyse the judgement and let us have her
views on the implications of the judgement for IR35.
Our initial assessment is that the EAT's judgement seems
to hinge on two factors. First that there was no contractual
relationship between HP and O'Murphy and the Employment
Tribunal were wrong to ignore this aspect. In their decision
the EAT state:
"�If the Tribunal had asked itself that question and answered
it in accordance with the evidence it would we think be
bound to have come to the conclusion that there was no contractual
nexus between Mr O' Murphy and HP"
In considering this issue the Appeal Court has looked closely
at the decision in the Costain vs Smith case from 2000,
which they argue is very similar in its issues. The judgement
goes on to discuss the argument of O'Murphy's lawyer John
Antell that a contract between HP and O'Murphy can be inferred
and they say:
" The work and payment are not in dispute but what was
disputed was whether they rose by way of mutual obligation
which they clearly did not"
This comment raises the second issue - that of mutuality
of obligation.
The Judgement makes much of the fact that there is no contract
between O'Murphy and HP. This echoes the view taken by some
tax advisers that the lack of a contract between the contractor
and the end client could well be an insurmountable problem
under IR35.
However, this may not so helpful when it comes to IR35
issues because, unlike in employment law issues, IR35 legislation
requires that you construct a hypothetical contract between
the worker and the end client. However, the comment about
mutuality of obligation could be very helpful - unless it
can be argued that, under the hypothetical relationship,
mutuality would exist? Nevertheless this recalls a comment
made by Mr Justice Burton in his judgement on the PCG judicial
review. He said:
"Of course there is in fact no contract between the client
and the service contractor, and thus no obligation on either
party owed to each other, but it must be significant, when
applying the common law test, to consider whether, looking
at the actual relationship, and a notional contract, between
the client and the service contractor, any obligation would
be owed by the client."
Once we have considered the judgement fully PCG will consider
whether there might be scope to assist contractors in general
based on this decision, or by taking the case further. For
example, Mr O'Murphy may take his case to the Appeal Court
or he could apply for a Revenue opinion his HP contract
on the basis that a finding that it is caught by IR35 could
be appealed to the special commissioners.
Ultimately there is a strong emotional argument that says
it must be wrong that if an EAT has concluded that Mr O'Murphy
was never at any time an employee of HP that tax law could
seek to tax him as if he was."
Further discussion of this case is taking place in the
PCG discussion forums: https://www.pcgroup.org.uk/threads/showpost.pl?f=legal-42224&p;=0&v;=c&s;=5
NB To make this link you must be a full member of PCG
and logged into the discussion forums. See https://www.pcgroup.org.uk/members/discussion_forum.html
PCG AGM & Conference
Last opportunity to make your booking for the conference,
taking place in York this Saturday (13th October).
See link below for full details � the Conference is an
exceptional opportunity to meet fellow members, as well
as the Directors and key PCG suppliers, such as Accountax,
Qdos, Bond Pearce and Blackmore Borley.
Our panel of guest speakers will provide you with top level
advice and information to support the running of your business
� an event not to be missed! https://www.pcgroup.org.uk/members/conference2001/index.html
Contract Opinion Document
The Clearance Procedure document, recently agreed with
the IR, provides guidance as to what information you need
to present to the Revenue to ensure they are aware of all
relevant facts when they make an IR35 assessment of your
business.
The purpose of the Clearance Procedure is:
- to ensure members understand what is required to pass
the status tests,
- to assist members to apply those requirements in their
working relationships
- to demonstrate to the Revenue wherever possible what
the correct interpretation of status tests is in the situation
of knowledge based contracting and
- to obtain Revenue agreement to practical guidance that
assists PCG members to pass those status tests.
See link below for full details:
https://www.pcgroup.org.uk/members/resources/clearance_proc.pdf
Members' Resolutions
There is a members' forum on the site where members can
post their own resolutions and seek support. Current 'live'
resolutions can be viewed at:
https://www.pcgroup.org.uk/threads/wwwthreads.pl?a=l&f;=28
REGIONAL NEWS
Real Life Meetings
For the latest information and to start a local group
see
https://www.pcgroup.org.uk/threads/wwwthreads.pl?a=l&f;=meet
To promote your local meet through the newsletter - email
[email protected]
with REGIONS in the subject matter, details of the event
and a name and email contact point/or phone number for further
information.
Thames Valley
The Thames Valley group now follows a rotating schedule:
1st Tuesday of each month - Basingstoke
2nd Wednesday of each month � Farnborough � Weds 10th
3rd Thursday of each month � The Ship, Wokingham
Chichester
Thursday 11th October
The Old Cross, North Street, Chichester.
From 8pm
Bristol
Friday 12th October
The Naval Volunteer, King Street.
From 8pm
Newcastle upon Tyne
Wednesday 17th October, 2001 The next meeting will be in
the Carriage pub
(Archbold Terrace - 2 minutes from Jesmond Metro station)
at 7.30pm
Herts / Welwyn
Date: Thursday, 25 October Time: 7:30 pm onwards
Venue: The White Horse, Mill Lane, Welwyn
Blackpool/Fylde/Preston
New group being started:
https://www.pcgroup.org.uk/threads/showpost.pl?f=meet-3947&p;=0&v;=c&s;=5
Please follow this link to Real Life meetings to get involved
https://www.pcgroup.org.uk/threads/wwwthreads.pl?a=l&f;=meet
Susie Hughes
(Head of Executive Services)
This newsletter is published by the Professional Contractors
Group. Please feel free to circulate the newsletter to other
independent contractors who you know, and who may be interested
in joining the PCG. Some links in the newsletter will take
you into the password-protected members' area of the PCG
website. If you have forgotten your password, contact https://www.pcgroup.org.uk/scripts/public/access/form.pl
To view the Forum links in this newsletter, you must
be first logged into the Forum. Further details available
at https://www.pcgroup.org.uk/members/discussion_forum.html
|