When discerning whether an individual is an employee or a self-employed partner in a professional firm, judges look beyond the label attached to their engagement and focus on the reality of the relationship. A tax tribunal ruling provided a prime example of that multi-factorial approach in operation.
The case concerned an international tax specialist who was engaged by a UK firm of accountants. HM Revenue and Customs (HMRC) took the view that he was a self-employed partner in the firm and was therefore personally liable to pay National Insurance Contributions (NICs) in respect of a period of about 17 months.
Although he had formally been appointed a member of the firm, he asserted that he was a partner in name only and that he was, in substance, the firm's employee. He contended that the level of control the firm exercised over how he went about his work with clients was consistent with a contract of service. His argument that liability to pay the relevant NICs fell upon the firm by reason of his employment status was, however, rejected by the First-tier Tribunal (FTT).