This is something of a landmark case in which Ian Lorimer went to the court of appeal with assistance from Bectu (he had been a longstanding member of one of Bectu’s constituent unions ACTT) during the late 1980s period that the case examined, to establish that he wasn’t working on a series of short employment contracts, but that he was essentially running a business in his own right.
It’s a fascinating case that defines so many aspects of self-employment showing just how complex it is, and it shapes so much of HMRC’s thinking. The judgement can be read here.
Brian Hall was HM Inspector of Taxes at the time.
- Ian Lorimer built up a business – he got a CV together and went around touting for work.
- He built up a roster of 20+ clients with new companies periodically joining his roster and others dropping off…
- though a lot of his work was for a smaller number of high-volume clients.
- bookings on a first-come-first-served basis
- longest booking was 10 days
- he goes to the studio and stays until the job is done to the satisfaction of the client – so not fixed hours
- registered for VAT
- has some bad payers who keep him waiting for months
- doesn’t supply equipment and works at the engager’s premises
- doesn’t help fund the production
- doesn’t take financial risks (beyond not getting paid) related to the production
- he had help from his wife (pre-divorce) and then an agent doing his paperwork
- keeps a separate business bank account to handle his income/expenditure
- he occasionally provided a substitute on days that he couldn’t work (subject to client approval) – someone who he paid (charging the client slightly more)
A lot of those look like ‘operating a business in your own right’, but also a lot don’t.
The judgement contains this gem from J Mummery:
“In order to decide whether a person carries on business on his own account it is necessary to consider many different aspects of that person’s work activity. This is not a mechanical exercise of running through items on a check list to see whether they are present in, or absent from, a given situation. The object of the exercise is to paint a picture from the accumulation of detail.
The overall effect can only be appreciated by standing back from the detailed picture which has been painted, by viewing it from a distance and by making an informed, considered, qualitative appreciation of the whole. It is a matter of evaluation of the overall effect of the detail, which is not necessarily the same as the sum total of the individual details. Not all details are of equal weight or importance in any given situation. The details may also vary in importance from one situation to another.”
It also deals with the issue of ‘rare skill and judgement’ which is an important determinant of self-employment (because when you are hired for your RS&J, it’s hard to make the case that you are under too much ‘supervision direction and control’, but even this is very muddy – see…
“Mr. Lorimer …depended upon his own rare skill and judgment but submitted that the nature and degree of skill involved in the work cannot alone be decisive. Again I agree. A brain surgeon may very well be an employee. A window cleaner is commonly self-employed.”
All of that ‘standing back from a detailed picture which has been painted, by viewing it from a distance…’ seems to suggest that the court looked at Ian Lorimer’s big picture and decided that, on balance, he was self employed.