HMRC loses employment status case

The case. EMS (Independent Accident Management Services) Ltd (EMS) was a firm involved in the recovery of damaged motor vehicles on behalf of insurance companies. Mr Makings (M) ran a sole trade business (DKM Services) and was contracted by EMS as a driver. HMRC said that M was an employee of EMS, which ought to deduct PAYE and NI from any payments to him. EMS claimed that M was an independent contractor so he was responsible for any tax and NI due on his income.
Tribunal decision. The tribunal decided that M was self-employed as EMS had no right to control how M carried out his job after having agreed what needed to be done - EMS left M to undertake the job as he saw fit. Financial risk was also considered to be a relevant factor - M had purchased his own van and trailer, had to arrange his own insurance and did not receive holiday pay, sick pay or other benefits such as a pension from EMS. M also had the very real risk that his invoices may not be paid as he invoiced in arrears.
Tip. This case demonstrates that HMRC is trying to argue that a worker is an employee when the facts clearly indicate the opposite. If faced with a similar challenge from HMRC, it might be worth reminding it of the outcome in this case.