ESM7150 - Case Law: Andrews v King

1991 case - 64TC332

Point at issue

The tax inspector had contended that Mr Andrews was a self-employed gangmaster and assessable under Schedule D and, further, that he was the employer of the gang members and so obliged to operate PAYE.

Mr Andrews contended that he and the other gang members were employees.

Facts

Mr Andrews was engaged by a firm of potato merchants, J W Stanberry Ltd, in connection with potato picking and/or grading.

The firm would contact Mr Andrews and tell him how many men were required each day and he would arrange for them to be available. He provided transport to the workplace and the cost of this was shared equally between himself and the other gang members.

The firm supplied all the tools and equipment required and from time to time an employee of the firm supervised Mr Andrews together with the other men in the gang. Mr Andrews worked alongside the other men and they all negotiated the fee for work carried out. There was no extra money for Mr Andrews' role in selecting the other men. At the end of the week the payment for work done was made to Mr Andrews who, after deducting an agreed amount for transport costs, divided the balance between himself and the other workers in equal shares.

Decision

The Commissioners upheld assessments by the Revenue under Case 1 of Schedule D and upheld determinations under Regulation 29 of the Income Tax (Employments) Regulations.

Mr Andrews appealed to the High Court and the appeals were upheld.

Commentary

In upholding Mr Andrews' appeals the Vice Chancellor applied the test and indicia set out in the Market Investigations case (see ESM7040). He concluded that none of the usual factors was present and therefore Mr Andrews was not in business on his own account. In addition he was of the view that the gang, including Mr Andrews, worked under the general control and management of Stanberry’s. Although Mr Andrews selected the gang members he did not pay their wages. They shared the take equally after he had deducted the costs of petrol.

The case illustrates the importance of determining all the relevant facts in order to ascertain the true nature of the contractual arrangements that exist between an engager and a worker. It has no real precedent value.