RS Dhillon and GP Dhillon Partnership
| Jurisdiction | UK Non-devolved |
| Judgment Date | 03 January 2017 |
| Neutral Citation | [2017] UKFTT 17 (TC) |
| Date | 03 January 2017 |
| Court | First Tier Tribunal (Tax Chamber) |
[2017] UKFTT 017(TC)
Judge Zachary Citron, Tym Marsh
Mr Andrew Scrivens and Mrs Neeta Vora, of Croner Tax, appeared for the appellant
Mrs Glynis Millward, Officer of HMRC, appeared for the respondents
Income tax – PAYE – Whether drivers engaged by the appellant to make deliveries using the appellant's lorries were employees or independent contractors – Held – They were employees.
The First-tier Tribunal (FTT) found that drivers engaged by the appellant to make deliveries were employees and not independent contractors.
The appellant, a partnership trading as London Goods transport , provided haulage services to its customers, larger companies which produced asphalt, tarmac and other aggregates for the construction industry. The business was run by Mr Dhillon, the managing partner.
The appellant had a pool of potential drivers of its lorries. There were no written contracts between the appellant and its drivers. Typically, the appellant's customer would tell Mr Dhillon how many lorries were needed for deliveries and where the loads needed to be transported. Mr Dhillon would then contact drivers from the pool and offer them a particular delivery job. Drivers were paid a fixed amount per day or night shift if they accepted the job otherwise they received no pay (such as for holidays) other than occasional discretionary bonuses. How much work was given to drivers by the appellant depended on how much work the appellant was asked to do by its customers which was outside the appellant's control. The driver to whom a delivery job was offered could refuse in which case Mr Dhillon would contact another driver from the pool. Drivers could stop accepting work from the appellant (i.e. remove themselves from the pool) with no notice period. Divers could work for businesses other than the appellant if they wished. The driver who accepted the appellant's offer of a delivery job (the “first driver”) could procure another driver (the “second driver”) when, for example, the first driver was prohibited by law from driving a shift (because of legal limits on the amount of continuous hours drivers of heavy goods vehicles could drive) provided the second driver had been approved by the appellant's customer to do the job. In this case, the appellant paid the first driver the usual fixed fee and it was a matter for agreement between the first driver and the second as to what the former paid the latter.
The FTT held that not unusually, the indicta of employment v self-employment when applied to the facts of this case did not point consistently in one direction. The fact that the drivers operated without supervision and had a limited right to substitute other drivers in their place, pointed to self-employment whereas the lack of evidence that the drivers were in business on their own account, combined with quite prescriptive rules for the performance of the deliveries imposed by the appellant, pointed to employment.
The FTT looked at the overall picture and found that this was a case of a business-savvy appellant which entered into detailed written agreements to provide delivery services for its customers and built up a network of men to drive its lorries. The drivers were engaged on unwritten, short term contracts, on standard terms largely dictated by the appellant. Some drivers engaged with the appellant on just a few occasions whereas others did so over extended periods of time. The appellant, for its part, was clearly carrying on business on its own account. The drivers, on the other hand, were essentially “day labourers” engaged on terms that were unwritten, uncomplicated and non-negotiable. Although these engagements were short-term, the FTT concluded that looking at the whole picture, “master and servant” (whilst a somewhat outdated phrase) was an apt description of the relationship between the appellant and its drivers. Mr Dhillon was very much “the boss” in the relationship; and this, combined with the near-total absence of evidence that the drivers were running their own businesses, lead the FTT to conclude that the drivers were employers of the appellant rather than self-employed contractors. The appeal was dismissed.
The principal reason the FTT gave for it reaching a different conclusion to the FTT in Turnbull [2011] TC 01243, which had similar, but not identical facts, was that the it had found from the evidence that: the mutuality of obligations was satisfied; the appellant exercised a considerable degree of control over their drivers; and the drivers in this case were not in business on their own account. The FTT underlined the importance of avoiding a checklist approach when considering employment v self-employment and of making an informed, considered approach of the overall picture.
[1] The appellant was in the business of delivering asphalt and other materials for its customers, the producers of such materials. The question in the case was whether the drivers engaged by the appellant to drive its lorries were employees of the appellant or independent contractors.
[2] On 4 March 2014, HMRC issued determinations under regulation 80 of the Income Tax (Pay As You Earn) Regulations 2003 (SI 2003/2682) (the “PAYE Regulations”) and decision notices under s8 Social Security Contributions (Transfer of Functions, Etc) Act 1999 on the appellant in respect of (respectively) PAYE income tax and Class 1 National Insurance Contributions for the income tax years 2009–10 to 2012–13 inclusive relating to drivers who worked for the appellant in those periods. The details were as follows:
| Income tax year(s) | Driver | Amount (£) |
| 2009–10, 2010–11, 2011–12, 2012–13 | GS Athwal | 21,748 |
| 2011–12, 2012–13 | T Singh | 4,631 |
| 2009–10 | S Singh | 4,708 |
| 2012–13 | K Singh | 1,091 |
| 2009–10, 2010–11 | K Singh | 7,577 |
| 2011–12 | F Singh | 1,197 |
| 2010–11 | B Singh | 554 |
| 2009–10, 2010–11, 2011–12 | A Singh | 11,419 |
| 2009–10, 2010–11 | SS Sangha | 1,184 |
| 2009–10, 2010–11 | S Phull | 4,905 |
| 2010–11, 2011–12, 2012–13 | JS Mashiana | 10,068 |
| 2009–10, 2010–11, 2011–12 | B Mann | 6,090 |
| 2009–10, 2010–11, 2011–12, 2012–13 | TR Mall | 8,069 |
| 2011–12, 2012–13 | PS Khela | 928 |
| 2011–12, 2012–13 | DS Khalsa | 2,273 |
| 2012–13 | SS Grewal | 1,869 |
| 2009–10, 2010–11, 2011–12 | PS Bhatti | 7,816 |
| 2011–12, 2012–13 | GS Basra | 1,482 |
| 2009–10, 2010–11, 2011–12, 2012–13 | MS Banwait | 20,673 |
| 2009–10, 2010–11, 2011–12 | HS Bal | 8,372 |
| 2009–10, 2010–11 | SS Badhan | 5,505 |
| 2011–12, 2012–13 | S Athwal | 1,601 |
| 2012–13 | MS Sran | 2,233 |
| 2011–12, 2012–13 | J Singh | 2,057 |
(At the hearing, HMRC confirmed their acceptance of the exclusion of ADS Bajwa from the above)
| Income tax year | Amount (£) |
| 2009–10 | 34,407 |
| 2010–11 | 34,202 |
| 2011–12 | 20,577 |
| 2012–13 | 18,812 |
[3] On 9 February 2015, the appellant requested a review of these determinations and decision notices. In a review decision letter of 13 May 2015, HMRC upheld the original decisions.
[4] The appellant appealed by notice of appeal dated 12 June 2015.
[5] We had witness statements, and heard oral evidence, from the following, each of whom we found to be a credible witness:
- Mr Bryan Yates, an officer of HMRC and their employment compliance officer involved in the appellant's case;
- Mr Lyndon Morgan-Foley, the higher status officer of HMRC involved in the appellant's case; and
- Mr Resham Singh Dhillon (Mr Dhillon), the managing partner of the appellant (the other partner in the appellant being Mr Dhillon's wife).
We also heard oral evidence from Mr Jagdeep Dhillon, Mr Dhillon's son, who was familiar with the appellant's business.
[6] HMRC produced four document bundles for the hearing containing (inter alia):
- correspondence between the parties;
- a 25-page franchise agreement dated 6 February 2006 between the appellant and one of its principal customers;
- the health and safety manual for hauliers (15 pages), and operating manual in respect of haulage contractors (to be read in conjunction with the franchise agreement) (39 pages) of another of the appellant's principal customers;
- notes from meetings held in June 2011 between HMRC officials (Mr Yates and Mr Ian Edwards) and each of three drivers for the appellant: Mr A Singh, Mr MS Bainwait and Mr GS Athwal. The place of the meetings with Mr Singh and Mr Athwal was recorded as San & Co Associates Ltd (Accountants), and one of the attendees was Mr Sanjay Auluck (accountant). The place of the meeting with Mr Banwait was recorded as Jolly & Co Accountants, and the additional attendee was recorded as Vishar Kunj (Accountant, Interpreter). Each meeting note consisted of 68 or 69 questions in bold, with responses recorded in ordinary type, and was signed as a true record of the minutes of the meeting, the questions asked and the answers given by HMRC and (except in the case of the note of the meeting with Mr Singh) the driver and his accountant;
- notes from a meeting between HMRC officials (Mr Yates and Mr Edwards) and the appellant (Mr Dhillon, Mr Jagdeep Dhillon and Mr Sisodia, the appellant's accountant) held on 4 November 2010. This was in narrative form and signed by HMRC (only) on 8 November 2010. Another note of the same meeting, produced by HMRC on the day of hearing, was in the form of 47 questions in bold type and responses in ordinary type. The questionnaire-format note was signed as a true record of the minutes of the meeting, the questions asked and the answers given by HMRC on 8 November 2010 and by Mr Dhillon and Mr Sisodia on 26 August 2011; and
- six invoices addressed to the appellant from the three drivers interviewed by HMRC in June 2011 (see (d) above), all pertaining to the period July–September 2011:three from Mr Athwal, dated July 2011, 30 August 2011 and 30 September 2011, for certain driving shifts at rates between £70 and £110;one from Mr Singh, for invoice date 1 July 2011 to 31 July 2011, for various shifts, and also a late finish bonus of £20; andtwo from Mr...
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Paya Ltd and Others
...and so not relevant (referring to O'Kelly v Trusthouse Forte plc [1984] 1 QB 90 at 121 F and RS Dhillon and GP Dhillon Partnership [2017] TC 05583 at [35] and following). He did not, however, make any specific point on what factors might be the product of market forces in this case. Mr Peac......