MBF Design Services Limited v Commissioners for Her Majesty's Revenue and Customs
Decision date: 5 January 2011
Neutral citation: [2011] UKFTT 35 (TC)
Overall AI summary confidence: high
Short overview
This short overview is intended to summarise the case, issues and outcome so far as they are supported by the judgment.
AI confidence in this short overview: high
This case concerned whether Mr Fitzpatrick, supplied to Airbus via intermediaries, would have been an employee and employed earner under a hypothetical direct contract for NICs and income tax. The tribunal found that, applying the statutory hypothesis and considering contractual terms and practical outworkings (personal service/substitution, mutuality, control, and business-on-own-account), the notional contract would not make him an employee or employed earner. HMRC’s determinations were overturned and the appeals for the years in issue were allowed.
Ratio decidendi
This summary is intended to identify the ratio decidendi, meaning the legal reasons for deciding and the binding part of the decision.
AI confidence in this ratio decidendi summary: high
The tribunal applied the statutory hypothesis for intermediated supply cases: hypothesise the direct contract that would have existed between worker and client and determine employment status by reference to both the terms of that notional contract and their practical outworking. Relevant factors to be weighed include personal service and substitution, mutuality of obligation, degree of control, whether the worker is in business on his own account, and the objective legal effect of the relationship rather than contractual labels.
Obiter dicta
This summary is intended to identify obiter dicta, meaning observations made by the way that were not necessary to deciding the case and are not binding.
AI confidence in this obiter dicta summary: medium
The judgment suggests that absence of any real prospect of substitution in practice does not automatically preclude finding the engagement to be an independent professional contract; similarly, on-site work and use of client equipment are not decisive indicators of employment where explained by project needs.