Employment Status Dispute - iR35 Rules

Universal18

A new employment agency had taken over the recruiting service from my previous agency, that had previously operated the service for 15 years, however they had always employed their drivers on PAYE. Nothing about the job had changed, it was exactly the same as before, but the new agency decided to change the seasonal contract to self-employed, thus avoiding the need for them to make income tax, NI and holiday payments. It was a job I had loved doing for the past seven years and I wanted to keep it so although it did not seem right, in March 2024 I signed their self-employed contract.

In May this year, I sent an email to the new agency for employment status clarification, copy below. 

Its worth noting that the new agency is no longer based in the UK and operates mainly from India and Africa.

---------------------------     -------------------------------     ----------------------------------

Employment Status Dispute – Request for Review and Compensation for Holiday Pay and Rights 2024

I am writing regarding my engagement with your agency during the 2024 season as a ******* ******* driver on behalf of ****** ******. I worked on this project from March until mid-November 2024.

While I was classified as self-employed during this period, I believe this classification was incorrect, and that I should have been treated as an employee or at least a worker under UK employment law.

The job was identical to the work I carried out during the previous four consecutive seasons (2020–2023) under PAYE with a different agency. My responsibilities, hours, method of supervision, and control were the same. I had no autonomy over working hours or routes, used a ****** provided vehicle and equipment, followed strict instructions, and was subject to close supervision. Additionally, I have confirmed via HMRC’s official Check Employment Status for Tax (CEST) tool that I should have been classified as an employee for tax purposes.

Furthermore, I understand that at least one other agency contracted for the same ****** ******      ****** ****** project continued to treat their drivers as PAYE employees during 2024.

As such, I believe I was entitled to employment rights, including:

• Holiday pay (a statutory right of 5.6 weeks per year for workers)

• Correct PAYE income tax payments to HMRC
  

• Other employee or worker protections

I respectfully request that you:

1. Review my employment status for the 2024 season

2. Confirm whether I am owed any backdated holiday pay or other entitlements

3. Provide an explanation of how your agency determined my self-employed status despite clear indications to the contrary

I hope to resolve this matter amicably. If I do not receive a satisfactory response, I may pursue the matter further with HMRC, ACAS, or an employment tribunal where applicable.

Please respond within 14 days of this email.

-----------------------------    --------------------------------    ---------------------------------

They replied saying...

'Thank you for bringing your concerns to our attention. We take all employment-related matters seriously, and we are currently reviewing the points you raised regarding your engagement with our agency during the 2024 season as a ****** ****** ******  Driver.

We will thoroughly assess the details of your classification, including your entitlement to holiday pay and other rights under UK employment law. We aim to respond to your inquiry within the 14-day period as requested.

If we require any further information, we will be in touch.

Thank you for your patience in this matter.

Kind regards,  HR Team'

--------------------------------    -------------------------------    ----------------------------------

However they did not respond and ignored my follow up email.

I also contacted HMRC but the person I spoke to said there was a long back list and someone will contact me to discuss the problem within three weeks. That was six weeks ago and still no reply. 

I have not yet paid my self-employed, self assessment income tax.

It seems that in spite of my all requests, no one is interested in answering my questions, not even HMRC. 

Where do I go from here, are there any other options? 

DullGreyGuy

Universal18 said:

A new employment agency had taken over the recruiting service from my previous agency, that had previously operated the service for 15 years, however they had always employed their drivers on PAYE. Nothing about the job had changed, it was exactly the same as before, but the new agency decided to change the seasonal contract to self-employed, thus avoiding the need for them to make holiday and NI payments. It was a job I had loved doing for the past seven years and I wanted to keep it so although it did not seem right, in March 2024 I signed their self-employed contract.

In May this year, I sent an email to the new agency for employment status clarification, copy below. 

Its worth noting that the new agency is no longer based in the UK and operates mainly from India and Africa.

---------------------------     -------------------------------     ----------------------------------

Employment Status Dispute – Request for Review and Compensation for Holiday Pay and Rights 2024

I am writing regarding my engagement with your agency during the 2024 season as a ******* ******* driver on behalf of ****** ******. I worked on this project from March until mid-November 2024.

While I was classified as self-employed during this period, I believe this classification was incorrect, and that I should have been treated as an employee or at least a worker under UK employment law.

The job was identical to the work I carried out during the previous four consecutive seasons (2020–2023) under PAYE with a different agency. My responsibilities, hours, method of supervision, and control were the same. I had no autonomy over working hours or routes, used a ****** provided vehicle and equipment, followed strict instructions, and was subject to close supervision. Additionally, I have confirmed via HMRC’s official Check Employment Status for Tax (CEST) tool that I should have been classified as an employee for tax purposes.

Furthermore, I understand that at least one other agency contracted for the same ****** ******      ****** ****** project continued to treat their drivers as PAYE employees during 2024.

As such, I believe I was entitled to employment rights, including:

• Holiday pay (a statutory right of 5.6 weeks per year for workers)

• Correct PAYE income tax payments to HMRC
  

• Other employee or worker protections

I respectfully request that you:

1. Review my employment status for the 2024 season

2. Confirm whether I am owed any backdated holiday pay or other entitlements

3. Provide an explanation of how your agency determined my self-employed status despite clear indications to the contrary

I hope to resolve this matter amicably. If I do not receive a satisfactory response, I may pursue the matter further with HMRC, ACAS, or an employment tribunal where applicable.

Please respond within 14 days of this email.

-----------------------------    --------------------------------    ---------------------------------

They replied saying...

'Thank you for bringing your concerns to our attention. We take all employment-related matters seriously, and we are currently reviewing the points you raised regarding your engagement with our agency during the 2024 season as a ****** ****** ******  Driver.

We will thoroughly assess the details of your classification, including your entitlement to holiday pay and other rights under UK employment law. We aim to respond to your inquiry within the 14-day period as requested.

If we require any further information, we will be in touch.

Thank you for your patience in this matter.

Kind regards,  HR Team'

--------------------------------    -------------------------------    ----------------------------------

However they did not respond and ignored my follow up email.

I also contacted HMRC but the person I spoke to said there was a long back list and someone will contact me to discuss the problem within three weeks. That was six weeks ago and still no reply. 

I have not yet paid my self-employed, self assessment income tax.

It seems that in spite of my all requests, no one is interested in answering my questions, not even HMRC. 

Where do I go from here, are their any other options? 

IR35 doesnt apply as you are self employed not operating via a PSC, so the title is a red herring. 


When was their response given? 

Why didnt you do your self assessment? You'll be incurring penalties and interest which won't be waived if it turns out you are wrong and are actually self employed.

Speak to ACAS, you can have a conversation with them without having to start anything.

Do you have Legal Expenses cover on your Home insurance? If you do then that too may be worth a conversation with their advice line.  

Universal18

Thanks for the reply.
I spoke to HMRC and they said as I was not paid until mid May 2024, I can pay income tax in 2025/2026 

Also, the agency failed to reply and give an explanation.  
You appear to have overlooked that the Check Employment Status for Tax (CEST) tool stated that I should have been classified as an employee for tax purposes.

ChatGPT says...  

IR35 Does Not Apply If:

• The worker is hired directly as:

  • A sole trader (self-employed) — no company involved

  • A direct employee of the agency

• The agency is the employer and pays PAYE tax and NICs

DullGreyGuy

That would be correct on a cash accounting basis, which is the default for a sole trader.

And yes, ChatGPT agrees with me, IR35 is irrelevant as at present you are the first sub bullet, self employed (aka sole trader)

cr1mson

Am I right that contract was March 2024 - November 2024 in which case you would be out off time for an Employment Tribunal as more than 3 months less a day since occured. Is it possible that they are aware of this and therefore not bothering to reply?

Maybe you need to consider an alternative approach as other legal avenues may have different time limits but best to seek proper legal advice.

Grumpy_chap

Universal18 said:

A new employment agency had taken over the recruiting service from my previous agency, that had previously operated the service for 15 years, however they had always employed their drivers on PAYE. Nothing about the job had changed, it was exactly the same as before, but the new agency decided to change the seasonal contract to self-employed, thus avoiding the need for them to make income tax, NI and holiday payments. 

When you changed from PAYE to sole-trader, did your rate of pay change?

Universal18

The rate of pay was an extra .50p per hour, over the previous year. 

penners324

Who are you actually driving for?

Sounds like they've used this agency as it's vastly cheaper.

Your hourly pay should have gone up about 30% to leave you in the same position as before. Including holiday pay, taxes, lost pension contributions etc

Universal18

 penners324. Sounds like they've used this agency as it's vastly cheaper.

Your are correct. The new agency I worked for was DeRisk Technologies, but there are a couple of other agencies and as I mentioned, at least one of them still employ under PAYE for exactly the same role. I can't name the actual main client due to NDA.

Its so frustrating that agencies are allowed to operate this way, probably due to operating out of India. HMRC are not interested even though their own CEST tool agrees I should be classed as employed PAYE. 

Undervalued

Universal18 said:

....................

I hope to resolve this matter amicably. If I do not receive a satisfactory response, I may pursue the matter further with HMRC, ACAS, or an employment tribunal where applicable.

Please respond within 14 days of this email.

-----------------------------    --------------------------------    ---------------------------------

They replied saying...

'Thank you for bringing your concerns to our attention. We take all employment-related matters seriously, and we are currently reviewing the points you raised regarding your engagement with our agency during the 2024 season as a ****** ****** ******  Driver.

We will thoroughly assess the details of your classification, including your entitlement to holiday pay and other rights under UK employment law. We aim to respond to your inquiry within the 14-day period as requested.

If we require any further information, we will be in touch.

Thank you for your patience in this matter.

Kind regards,  HR Team'

--------------------------------    -------------------------------    ----------------------------------

However they did not respond and ignored my follow up email.

I also contacted HMRC but the person I spoke to said there was a long back list and someone will contact me to discuss the problem within three weeks. That was six weeks ago and still no reply. 

I have not yet paid my self-employed, self assessment income tax.

It seems that in spite of my all requests, no one is interested in answering my questions, not even HMRC. 

Where do I go from here, are there any other options? 

It is worth noting that sometimes in these situations HMRC and an Employment Tribunal can take opposing views on employment status and neither is binding on the other!

sheramber

Are you in a union?