A doctor who provided services to two hospitals via a personal services company has been deemed an employee for tax purposes after a long-running legal battle.

In the case of Mantides vs HMRC, George Mantides worked as a locum urologist for two hospitals – Medway Maritime Hospital and Royal Berkshire Hospital – in 2013.

HMRC decided to investigate his worker status, taking the view that he could be operating as a disguised employee for both hospitals, and therefore not paying the right level of tax or national insurance.

Mantides contested this in the First Tier Tribunal in 2019. The FTT gave a split decision, ruling that his contract with the Royal Berkshire was inside IR35 (i.e. he could be considered an employee for tax purposes) and outside IR35 for Medway (not an employee).

In 2021, HMRC had planned to appeal this decision but missed the deadline to submit the appeal, and was refused a time extension.

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Mantides then appealed the decision regarding Royal Berkshire with the Upper Tier Tribunal (UTT), but this verdict was withheld until a decision on a separate worker status case on football referees was published.

In the case of Professional Game Match Officials vs HMRC, the Supreme Court ruled in late 2024 that there are two essential elements for a test on worker status: mutuality of obligation and a sufficient degree of control.

This week, almost six years after the initial tribunal decision, the UTT dismissed Mantides’ appeal and upheld the FTT’s original decision, arguing that there was no right to substitution and the level of control exercised over him.

Seb Maley, CEO of IR35 specialist Qdos, said the case demonstrated the complex nature of employment status.

“Employment status compliance is something freelancers, contractors and businesses engaging these workers need to give the attention it deserves if they want to avoid repeat scenarios,” he said.

“There were several pointers towards an employee-employer relationship here – no right of substitution being one and mutual obligation another.

“But that’s not to say every contractor who can’t provide a substitute belongs inside IR35. Status is about picture painting, with dozens of aspects taken into consideration before making a considered assessment.

“It’s also impossible to overlook the sheer length of time it took to play out. The work took place 12 years ago. The long, drawn-out nature of these cases desperately needs addressing – both for the individual at the heart of them and also to make the best use of taxpayers’ money.”

Dave Chaplin, CEO of IR35 compliance firm IR35 Shield, said the “nuanced procedural aspects” of this case hamstrung Mantides’ ability to win his appeal.

“It will be frustrating for the appellant to read that the upper tier had to rely on an FTT finding that control was a neutral factor, particularly when an independent clinician such as Mantides, has full autonomy and authority over his decision making and is ultimately answerable to the General Medical Council, and not MMH or RBH,” he said.

“In my view, had all factors been open for reconsideration, the upper-tier may have been able to reach a different conclusion. We are now left with a rather absurd situation where two almost identical engagements have been ruled two different ways, with a time gap of six years between decisions, during which the case law has moved on considerably.”

Although Labour’s Next Steps to Make Work Pay document proposed a simplification of how worker status is determined, this has not been included in the Employment Rights Bill.

 

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