George Mantides Limited v HM Revenue & Customs [2025] UKUT 124 (TCC)
The judgment in George Mantides Limited was finally published after a delay to allow the appeal process in HM Revenue & Customs v PGMOL UKSC/2021/0220 (“PGMOL”) to be concluded.
The appeal primarily concerned an engagement between the appellant company, George Mantides Limited, and Royal Berkshire Hospital (“RBH”), which was determined by the First-tier Tribunal in 2019 to be caught by the IR35 legislation in sections 48-61 of the Income Tax (Earnings and Pensions) Act 2003. HM Revenue & Customs failed to appeal in time against the decision that the IR35 legislation did not apply to the engagement with Medway Maritime Hospital (“MMH”). Mr Mantides is a urologist and undertook short-term engagements at both hospitals.
The Upper Tribunal decided, in essence, that the engagement between George Mantides Limited and RBH was deemed employment, and Mr Mantides would be considered an employee of RBH for tax purposes. While technically a success for HM Revenue & Customs, George Mantides Limited may yet be appealable, so it should be approached with caution.
In paragraph 46 of the judgment, Judge Scott sought to remake the decision of the FTT at the evaluative stage of Ready Mixed Concrete v Minister of Pensions and National Insurance [1967] 2 QB 497 (“RMC”) only to the extent that the FTT erred in law. In paragraph 49(6), Judge Scott relied on the FTT’s finding that the “degree of control actually exercised over Mr Mantides was a neutral factor”. However, it is arguable that in considering the question of control in the evaluative stage 3 of RMC, greater emphasis should be placed on whether the contract and other circumstances give rise to “a framework of control sufficient for the purposes of meeting the control test for employment purposes” (per Lord Richards in PGMOL at paragraph 88).
The extent of any framework of control needs to be carefully considered when assessing the IR35 status of a contract. Whether the existence of a “lawful authority to command” (per Dixon CJ in Zuijs v Wirth Brothers Pty Ltd (1955) 93 CLR 561 at p571) is sufficient to create a framework of control is highly dependent on the drafting of the contract and circumstances of the engagement, irrespective of its duration.
Further, this judgment illustrates the importance of contractors and large clients being aware of their obligations during notice periods. A material factor in determining that the engagement with MMH was not deemed employment was that the engagement could be terminated without notice.
Although not a ground of appeal, the absence of a contractual notice period indicates an insufficient degree of mutuality of obligations. The need to consider the nature and extent of mutuality of obligations for the purposes of RMC stage 3 was confirmed by the Court of Appeal in HM Revenue & Customs v Atholl House Productions Limited [2022] EWCA Civ 501.
Where a client wishes to engage a contractor on an outside IR35 basis, a well-drafted contract should be used that excludes any right of supervision, direction, or control. The alternative is a potentially expensive legal argument over stage 3 of RMC.
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