Does your client have the right to control the services?

27th February 2018
Written by Nigel Nordone

You may still be 'controlled' even if the client does not exercise it

Control has always been one of the key tests in determining IR35 status, set out in the case of Ready Mixed Concrete (South East) Ltd. v Minister of Pensions and National Insurance (1968).

It makes sense that a genuine contractor should have complete control over the method adopted to deliver the services, so where this is the case, and the client does not exercise any control over the services, you would expect that this would present an almost open-and-shut case.

With IR35 however, it is seldom that simple.


HMRC guidance

HMRC’s guidance on control states that;

“What we are concerned with is the right to control what the worker has to do, where it has to be done, when it has to be done and how it has to be done. It is the right to exert control that is significant; not whether that right is exercised ... The right of an engager to exert control over a worker is a strong pointer towards employment.”

ESM0518 goes on to say that;

“In many cases, particularly where the work in question involves the use of an individual with specialist skills or knowledge, there may be little evidence of the engager exercising control. The key question is could the engager exercise control?”

You may therefore not be subject to any control by your end client, but as indicated above, it is necessary to question whether the end client has a right at any time to exercise control over the services if they choose to do so. If the client does possess a right to control the services, this could be considered a strong pointer towards employment, albeit not conclusive by itself.

A right of control could become evident if, for example, the end client’s priorities were to change and you were requested to move onto a completely different project. Alternatively, the client could overrule a decision you may have made concerning performance of the services.


Case law

This subject was particularly prevalent in the recent Tribunal case involving Christa Ackroyd, a former BBC presenter, who was operating through her own personal service company, CAM Ltd. Ms Ackroyd was engaged by the BBC to improve the ratings of ‘Look North’, the BBC's regional television news service for North, South and West Yorkshire, and the North Midlands, and whilst she exerted a high degree of control over her work, ultimately the BBC had the final say;

 “…the Editor had the right on behalf of the BBC to decide which stories to cover and in what order. There was room for professional disagreement but we are satisfied that ultimately these were decisions for the BBC.”

Additionally, it was argued that Ms Ackroyd was governed by the BBC’s Editorial Guidelines, which also indicated that Ms Ackroyd was subject to a right of control. The Tribunal concluded that Ms Ackroyd was an employee for tax purposes and the right of control was very significant in this case.

Autoclenz v Belcher (2011) also emphasises the point concerning the right of control;

“If the genuine contractual right of control to a sufficient degree does exist, it does not matter whether that right is exercised.”


What you can do

To ensure that the client doesn’t have a right of control over your services, you should make sure that you are engaged to provide very specific services. This will make it much more difficult to be moved from job to job. Additionally, as an independent specialist you should ensure that you make the decisions regarding how the work is to be delivered.

The end client may well want to undertake certain quality checks once the services have been completed which is perfectly acceptable but as a provider of specialist services you should not be directed by the client regarding what you will be doing on a day to day basis and how to do the work.  

Contractors should also be wary of adhering to excessive rules and regulations. Complying with the end client’s statutory rules and regulations is to be expected, but anything more than that should be treated with caution.

Having your contract reviewed for any controlling clauses as well as an evaluation of your working practices could also prevent any surprises in an investigation.
If you are ever in any doubt, please don’t hesitate to contact a member of the Consultancy Team who will be more than happy to provide some advice on your specific circumstances.

Nigel Nordone
Written by
Nigel Nordone
Nigel Nordone is the Head of Tax at Qdos, after working for HMRC for over 20 years as a tax inspector. We’ve decided to forgive him for this little transgression as his knowledge of how HMRC handle enquiries and compliance checks is really beneficial for both Qdos and our clients. Nigel specialises in employment status and has personally represented hundreds of clients who have been subject to a HMRC IR35/employment status enquiry.

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