Employment status and the right of substitution

Key points

• The right of substitution and employment status.
• Dhillon concerned a haulage business and its drivers.
• The three-fold test expounded in the Ready Mixed Concrete case which must be applied in order.
• Will a substitution clause demonstrate self-employment?
• The decisions in Turnbull and Usetech.
• When determining employment status review day-to-day operations and the reality of the situation.

On 2 May 2019 Keith Gordon provided members of the London Tax Society with an overview of recent tax cases. The talk covered a range of cases and tax concepts but the topics that generated the most discussion related to the art of substitution.

The case of RS Dhillon and GP Dhillon Partnership (TC5583) centred on a haulage business that entered into contracts with lorry drivers to deliver construction materials to clients. HMRC asserted that the drivers were employees and issued determinations under the Income Tax (PAYE) Regulations SI 2003/2682 Reg 80 and decision notices under the Social Security Contributions (Transfer of Functions...