Important new case on subcontractors

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The recent tax case of Yetis v Commissioners for HMRC and Style Superior Windows TC02410 show how important it is to get the treatment of a sub contractor right, reports Chartered Accountants Northampton Harris & Co. Mr Yetis was engaged as a self employed subcontractor by Style to generate sales on their behalf. A common enough arrangement. When Mr Yetis" tax bill came along, he dcided that he was not really self employed but was in fact an employee of Style.

The Court made two important rulings in this case.

First it decided that the "being in business on your own account" was a far more imprtant test than the traditional "control" test.

Secondly it decided that if a business decided to use a sub contractor then that business needed to check (and document that check) that the sub contractor was genuinely registered as self employed with HMRC AND that the sub contractor was paying over their own tax.

In this particular case, Mr Yetis was held to be Style"s employee because he was paid £200 a week irrespective of the level of sales he generated.

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