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No mutuality of obligation between individuals and the umbrella company

22 June 2022
Issue: 4846 / Categories: Tax cases
Exchequer Solutions Ltd (TC8506)

The taxpayer was an umbrella company. It provided the services of individual workers which it employed under an overarching or umbrella contract of employment to agencies which then supplied those services to contractors in the construction industry.

The key issue was whether the taxpayer employed the individuals on a continuous basis under an overarching contract of employment covering all the assignments undertaken by the individuals or whether there was a series of separate contracts for each individual assignment.

The distinction was important in relation to the employees’ entitlement to be reimbursed for travel and subsistence expenses without those payments being subject to tax or National Insurance. If there was an overarching contract of employment each place of work was a temporary workplace and the expenses could be paid tax free. If there was a separate employment contract for each assignment the workplace was in effect a permanent...

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