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A recent tribunal case is discussed by Allison Plager.
Subcontracted or not?
David and Sarah Hooper carried on in business as hairdressers. Three other hair stylists also worked from the salon, but on a self-employed basis. The point at issue was whether those three stylists supplied their services directly to the public, or whether they were subcontracted to the appellants with the result that the hairdressing services were supplies made to the public by the appellants.
Subcontracted or not?
David and Sarah Hooper carried on in business as hairdressers. Three other hair stylists also worked from the salon, but on a self-employed basis. The point at issue was whether those three stylists supplied their services directly to the public, or whether they were subcontracted to the appellants with the result that the hairdressing services were supplies made to the public by the appellants.
A recent tribunal case is discussed by Allison Plager.
Subcontracted or not?
David and Sarah Hooper carried on in business as hairdressers. Three other hair stylists also worked from the salon, but on a self-employed basis. The point at issue was whether those three stylists supplied their services directly to the public, or whether they were subcontracted to the appellants with the result that the hairdressing services were supplies made to the public by the appellants.
The tribunal considered the evidence, and said that the agreement laying out the working relationship between the self-employed stylists and the appellants was in places confusing and partly self-contradictory, but that it appeared that neither the stylists nor the appellants took very much notice of it. However, the agreement in the main and a number of other pointers were consistent with the stylists being independent. Other facts suggesting self-employment included:
each stylist had a chair for his exclusive use;
each stylist could put in a locum;
stylists purchased their own equipment;
stylists paid a rent for the use of the chair, and a further percentage of receipts for other overheads, the balance belonged to the stylist;
they could choose their working hours;
they were supplied with keys to the premises;
stylists could charge whatever prices they chose;
stylists had their own customers;
a notice in the salon said that the stylists were independent.
There were also factors indicating that the stylists made supplies to the appellants. For instance, there was only one receptionist; there was a single appointments book, albeit with the stylists' names at the top of different columns; shampooing clients' hair was done by junior employees of the salon; no areas were partitioned off for stylists; money was paid into one till. Furthermore, although the notice said that the stylists and appellants were in business independently, it was written ambiguously.
The tribunal said that the two most important aspects of the relationship between the appellants and the stylists were the actual carrying on of the practice of hairdressing and the financial side. Clearly, the appellants did not attempt to impose any control over how the stylists carried out their job, although a minor degree of control was necessary to ensure the smooth running of the shop. On the financial side, the stylists' receipts were their own money, and there was a way of distinguishing the takings of individual stylists.
Customs' point that outward appearances did not reflect that the stylists were carrying on separate businesses was not important in the day to day running of the shop.
The tribunal considered various cases relating to similar circumstances and where Customs had succeeded, including Cronin (trading as Cronin Driving School) v Commissioners of Customs and Excise [1991] STC 333, Commissioners of Customs and Excise v Jane Montgomery (Hair Stylists) Ltd [1994] STC 256, and Martin E Hosmer (8232). It also looked at Commissioners of Customs and Excise v MacHenrys (Hairdressers) Ltd [1993] STC 170 where the appeal was allowed. On balance, the tribunal said that financial and practical aspects of the relationship indicated separate trades, and agreed that the stylists were operating independent businesses within the appellants' premises.
The appeal was allowed.
(David and Sarah Hooper trading as Masterclass (16764).)
Subcontracted or not?
David and Sarah Hooper carried on in business as hairdressers. Three other hair stylists also worked from the salon, but on a self-employed basis. The point at issue was whether those three stylists supplied their services directly to the public, or whether they were subcontracted to the appellants with the result that the hairdressing services were supplies made to the public by the appellants.
The tribunal considered the evidence, and said that the agreement laying out the working relationship between the self-employed stylists and the appellants was in places confusing and partly self-contradictory, but that it appeared that neither the stylists nor the appellants took very much notice of it. However, the agreement in the main and a number of other pointers were consistent with the stylists being independent. Other facts suggesting self-employment included:
each stylist had a chair for his exclusive use;
each stylist could put in a locum;
stylists purchased their own equipment;
stylists paid a rent for the use of the chair, and a further percentage of receipts for other overheads, the balance belonged to the stylist;
they could choose their working hours;
they were supplied with keys to the premises;
stylists could charge whatever prices they chose;
stylists had their own customers;
a notice in the salon said that the stylists were independent.
There were also factors indicating that the stylists made supplies to the appellants. For instance, there was only one receptionist; there was a single appointments book, albeit with the stylists' names at the top of different columns; shampooing clients' hair was done by junior employees of the salon; no areas were partitioned off for stylists; money was paid into one till. Furthermore, although the notice said that the stylists and appellants were in business independently, it was written ambiguously.
The tribunal said that the two most important aspects of the relationship between the appellants and the stylists were the actual carrying on of the practice of hairdressing and the financial side. Clearly, the appellants did not attempt to impose any control over how the stylists carried out their job, although a minor degree of control was necessary to ensure the smooth running of the shop. On the financial side, the stylists' receipts were their own money, and there was a way of distinguishing the takings of individual stylists.
Customs' point that outward appearances did not reflect that the stylists were carrying on separate businesses was not important in the day to day running of the shop.
The tribunal considered various cases relating to similar circumstances and where Customs had succeeded, including Cronin (trading as Cronin Driving School) v Commissioners of Customs and Excise [1991] STC 333, Commissioners of Customs and Excise v Jane Montgomery (Hair Stylists) Ltd [1994] STC 256, and Martin E Hosmer (8232). It also looked at Commissioners of Customs and Excise v MacHenrys (Hairdressers) Ltd [1993] STC 170 where the appeal was allowed. On balance, the tribunal said that financial and practical aspects of the relationship indicated separate trades, and agreed that the stylists were operating independent businesses within the appellants' premises.
The appeal was allowed.
(David and Sarah Hooper trading as Masterclass (16764).)
