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Cite as: [2006] UKSPC SPC00527, [2006] UKSPC SPC527

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Mark Andrew Lewis (t/a MAL Scaffolding v Revenue & Customs [2006] UKSPC SPC00527 (27 March 2006)

SPC00527

Income tax – National Insurance contributions – whether named individuals were employees of a named employer or were sub-contractors employed in the construction industry – whether other named individuals are parties to those decisions

THE SPECIAL COMMISSIONERS

MARK ANDREW LEWIS

Trading as

MAL SCAFFOLDING

and others

Appellants

- and -

COMMISSIONERS FOR HER MAJESTY'S REVENUE AND CUSTOMS

Respondents

- and -

R ARMSTRONG and others

Third parties

Special Commissioner: DR DAVID WILLIAMS

Sitting in public in London on 24, 25 and 26 January 2006

Mr Dave Smith and Ms Sarah Thompson of Accountax Consulting Ltd for MAL Scaffolding and some of the individual appellants. The other individual appellants did not attend and were not represented

Mrs Chris Leggett, Ms Jane Hodge and Mr Mike Faulkner, officers of Revenue and Customs for the Respondents

None of the third parties attended or were represented

© CROWN COPYRIGHT 2006

DECISION

This decision is about the employment status of a number of individuals who worked during all or part of the tax years 1998-1999 to 2001-2002 for or with the business run by Mr Lewis under the name "MAL Scaffolding". MAL Scaffolding was subject to individual decisions about the individuals below variously for those years. Mr Lewis was also subject to Regulation 80 determinations in the following sums for those years:

1999-2000 £30,335.90

2000-2001 £65,781.58

2001-2002 £71,905.38

And, as noted below, he was subject to a decision related to unidentified individuals.

The parties to the appeals

Before turning to the question of the status of the individuals involved that is the substance of these appeals, it is necessary to identify the appellants and the third parties to whom this decision applies. For convenience, in this decision:

"the workers" refers to all those who were individually identified as working for or with Mr Lewis during the period from 1999-2000 to 2001-2002 other than Mr Edwards;

"MAL Scaffolding" refers to Mr Lewis in his capacity (according to the Respondents, and disputed by him) as employer of the workers and the unidentified workers;

"the individual appellants" means all appellants other than MAL Scaffolding;

"the Commissioners" refers to the Commissioners for Her Majesty's Revenue and Customs, and their predecessors, the Commissioners of Inland Revenue, the Respondents in all the appeals;

"the third parties" means all the workers to whom this decision applies other than the individual appellants, but does not, for the avoidance of doubt, include any unidentified workers.

MAL Scaffolding was run by Mr Lewis as a sole trader throughout the periods in question. The business was subsequently incorporated, but that does not affect these appeals.

Mr Edwards is Mr Tony Edwards. He was contract manager for MAL Scaffolding during part of the period in question. He was originally an appellant in these appeals, as was MAL Scaffolding in respect of his status. Both he and MAL Scaffolding have now withdrawn their appeals and accept that he was an employed earner during the period of his employment with MAL Scaffolding. Those appeals have now been closed.

Some of the workers appealed, as did MAL Scaffolding, against notices of decision that the workers were employees, and that MAL Scaffolding was liable to pay income tax under the PAYE system and National Insurance contributions ("NI contributions") for them, or that they had that liability. In addition, the Commissioners sought to impose liability on MAL Scaffolding in respect of unidentified workers for the year 1998-1999, and again MAL Scaffolding appealed. All the appeals were joined together to be heard at a common hearing following a direction by me on 18 May 2005. Others of the workers were joined by me as third parties to the common hearing by a direction made on 12 December 2005.

Accountax Ltd represented MAL Scaffolding and some individual appellants both before and at the hearing. Other individual appellants were separately represented, but none of them attended or were represented at the hearing. No third party took an active part in the proceedings although some sent responses to my direction either directly or through a representative.

The workers

An appendix to this decision sets out:

(a) The workers

(b) the status of each worker for the purposes of these appeals,

(d) The periods of assessment in which the Commissioners considered the workers to be employees, and

(e) The sums notified as the liability for NI contributions for each of those years.

To avoid doubt I also list all the individuals involved in these appeals below. I also indicate whether I received direct evidence from that individual at the hearing or indirect evidence in the papers about the status of that individual.

The individual appellants are:

L Bligh (note of telephone conversation by Commissioners on 09 04 2003)(party to an employment tribunal decision)

R Boxall

N Day

Wayne Day (gave oral evidence)

Mark Horan (gave oral evidence) (statement taken on 29 05 2002)

(note of telephone conversation by Commissioners on 17 01 2005)

(signed answers to questions supplied on 17 04 2005)

Emmerson Isted (gave oral evidence) (statement taken on 23 05 2002) (notes of telephone conversations by Commissioners on 06 10 2004, 13 10 2004 and 05 01 2005)

J Logan

JP MacLachlin

W Pemberton

Dominic Pocock (gave oral evidence) (signed answers to questions supplied on 19 04 2004)

Kevin State (who gave oral evidence) (signed answers to questions supplied on 19 04 2005)

The Commissioners requested the Special Commissioner to join all the other individuals who were named by the Commissioners as, in their view, employees of MAL Scaffolding during the periods in question as parties to the appeals. A Special Commissioner has the power under regulations 7 (proceedings to be heard together or in succession) and 8 (joining of additional parties) of the Special Commissioners (Jurisdiction and Procedure) Regulations 1994 both to hear proceedings at the same time or consecutively if common issues arise in both or all of the proceedings, and to join persons other than the appellants and respondents to any proceedings as a party to the proceedings. Several appeals having already been joined on the common issue of the employment status of certain categories of individuals working with or for MAL Scaffolding, it appeared to me desirable to add the other named individuals as parties to the proceedings so that all the named individuals in those categories were parties to the joined appeals about their status. Accordingly, I directed that notice be served, and it was served, on the following individuals joining them as parties to these proceedings:

R Armstrong

S Bligh (party to an employment tribunal decision)

P Dadswell

TM Day

R Hamblin

J Harding

M Hogg

T Holmes

N Kerswell

S Munro

I Pepper

M B Phillips

R Stanley

B Sullivan

N Tahsin (statement taken on 29 05 2002)

P Walker

M Wright

Several other individuals are named in the papers in a context that suggests that they were working for or with MAL Scaffolding. Some gave consent for appeals to be made on their behalf. However, they are not named in any assessment before me and they are neither appellants nor third parties for the purpose of this decision. Others, again, were employees of MAL Scaffolding at the relevant time, including Mr Lewis's secretary and a lorry driver, but again they are not involved in these appeals.

The general assessment

All the above are named individually in income tax assessments and/or decisions about NI contributions. In addition, the Commissioners imposed a regulation 80 determinations on MAL Scaffolding, dated 18 01 2005 and in the sum of £23,000. The Commissioners gave notice of decision on 18 01 2005 to MAL Scaffolding as follows:

"That various workers are employed earners in respect of their engagements with Mr M Lewis t/a MAL Scaffolding for the period from 6 March 1999 to

5 April 1999.

That Mr Lewis t/a MAL Scaffolding is liable to pay primary and secondary Class 1 contributions in respect of the earnings from those engagements.

The amount that Mr Lewis t/a MAL Scaffolding is liable to pay in respect of those earnings is £1021.26."

The Commissioners agreed that this raised the issue of principle whether it is possible to charge an employer for NI contributions on unnamed employees. The Commissioners had previously accepted that regulation 49 determinations could not be made against MAL Scaffolding with regard to income tax payable for unnamed individuals, and those notices were withdrawn and replaced by the notices under appeal. It raises the additional question here, where the status of all those named is in question, whether the employment status of an unnamed person can be determined. But, clearly, if none of the named individuals is an employee, then that decision will fail in any event. I therefore consider it only after the specific decisions and assessments.

The evidence presented

Accountax and the Commissioners presented an agreed bundle of documents. In addition, oral evidence under oath or affirmation was given by Mr Lewis, Mr Edwards, and the five individual appellants named above. Formal witness statements were presented for each witness other than Mr Isted.

No party produced any documents that were, or were contended to form any part of, or be written evidence of, a contract of employment or a contract for services agreed between MAL Scaffolding and any of the workers during any of the years in question. Nor is there any other document that records any of the matters that might usually be expected to form conditions of a contract of employment, or a contract for services, or common to both. The only documents I have seen are copies of advertisements, which were ambiguous and of little evidential value, and copies of statements accompanying payments made to one of the workers for work performed, which again adds little to the overall picture save that they are clearly not standard slips for the payment of wages to an employee. I am told that it is not in dispute that the proper income tax procedures had been followed to deduct income tax from payments made to the individuals on the assumption that they were sub-contractors.

The pay statements confirm that to have been the case. The status of the workers, and of each of them, is therefore to be determined not as a point of law based on the interpretation of a contractual – or any other - document, but as a mixed question of fact and law based mainly on oral evidence.

The law

The question with regard to each of the workers is whether he was an employee of MAL Scaffolding or whether he was an independent contractor supplying services to MAL Scaffolding at the relevant times.

The Commissioners took the view that all the workers were employed in connection with all their earnings from MAL Scaffolding during all the relevant years, and the decisions under appeal all reflect that view. With the exception of the separate position of Mr Edwards as contract manager, MAL Scaffolding and all individual appellants contend that none of them were employees at any relevant time and that they were all sub-contractors working under contracts to provide services. I approach the case with those as the two extreme situations. I do not assume that because one group of individuals of the three agreed groups (senior scaffolder, scaffolder, labourer) has a particular status, then this would therefore apply to the other groups. Nor, having heard from several of the individuals, do I consider that I should assume without more that one clear and definite answer applies in the same way to each of those within one of the identified groups. However, in the absence of any documentary evidence or of any oral evidence about any changes in the position of the workers as a whole during the relevant years, I do assume as a starting point that the status of each worker remained the same for him during his periods of work for or with MAL Scaffolding relevant to these appeals.

Mr Smith presented the submissions and evidence on behalf of MAL Scaffolding and some of the individual appellants. Ms Hodge replied on behalf of the Commissioners. Both made their presentations, by agreement on all sides, after all the witnesses had been heard. I heard no argument or representation of substance, nor received any evidence of any weight, from any other appellant, or from any third party save for the statements taken for the Commissioners and noted above.

Mr Smith rested the core of his argument on the widely cited authority Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance [1968] 2 QB 497. At page 515 MacKenna J set out the three conditions for a contract of service:

"(i) The servant agrees that, in consideration of a wage or other remuneration, he will provide his own work and skill in the performance of some service for his master. (ii) He agrees, expressly or impliedly, that in the performance of that service he will be subject to the other's control in a sufficient degree to make that other master. (iii) The other provisions of the contract are consistent with it being a contract of service."

In Mr Smith's submission, the evidence established that the relationship between MAL Scaffolding and the workers fell short of each of these three tests. He suggested that the evidence did not establish to the sufficient degree any of the tests laid down in the Ready Mixed Concrete case. It was below the "irreducible minimum". In Montgomery v Johnson Underwood Ltd [2001] EWCA 318, both Brooke LJ and Buckley J emphasised, with the agreement of Longmore LJ, that the three tests laid down the minimum legal requirement for a contract of service to exist.

He submitted that the starting points were the absence of any written agreement and also the absence of any obligation on MAL Scaffolding to offer the workers any work. Mr Lewis usually could provide work if he chose to do so, and he usually did so. That was a service he offered the workers. But there was no mutual obligation on a continuing or future basis. Likewise, all the workers could refuse work offered by MAL Scaffolding at any time. Neither the refusal to offer work nor the refusal of work was a breach of any agreement between them.

The evidence that the workers were free to, and did, refuse work was, in Mr Smith's submission, the same sort of "knockout blow" as was noted in the decision of the Employment Appeal Tribunal in Stuncroft Ltd v Havelock, EAT/1017/00 of 12 November 2001. In that case the appellant had made a clear admission in a letter that he was not obliged to accept work from his "employer". The Tribunal allowed an appeal from a decision of the employment tribunal that, despite that evidence, the appellant was an employee. It did so because this showed a want of mutuality. And it did so after citation of several authorities on the point.

He also contended that the evidence showed that payment was made by MAL Scaffolding for work previously done, not on any future or continuing basis. The point was the same as that on which Park J commented in Usetech Ltd v Young (2004) 76 TC 811 at 844:

"I would accept that it is an over-simplification to say that the obligation of the putative employer to remunerate the worker for services actually performed in itself always provides the kind of mutuality which is a touchstone of the employment relationship."

That also evidenced no continuity.

With regard to the second test of control, Mr Smith submitted that the evidence was that of fiercely independent people over whom MAL Scaffolding had no control. There were limited site visits. The evidence also was that MAL Scaffolding had no competence to assess the quality of the work of the scaffolders. That could only be done by site agents of the main contractors.

He also submitted that there was evidence of substitution, and that the workers did not feel obliged to provide all the services themselves. In this he relied on evidence, in particular, from Mr Ison that he had sent a substitute on an occasion.

The lack of evidence that others did not use that right – for example Mr State – did not remove the position that a substitute could be sent. The importance of this point was shown by the decision of the Court of Appeal in Express and Echo Publications v Tanton (unreported, 11 March 1999), another decision that had endorsed the test of MacKenna J in the Ready Mixed Concrete case. Applying the test to the facts of that case, Peter Gibson LJ, with the agreement of the other judges, stated:

"… where, as here, a person who works for another is not required to perform his services personally, then as a matter of law the relationship between the worker and the person for whom he works is not that of employer and employee".

Mr Smith then turned to the other well-known test about employment status, that of Cooke J in Market Investigations v Minister of Social Security [1969] 2 QB 173 at 185:

"The most that can be said is that control will no doubt always have to be considered, although it can no longer be regarded as the sole determining factor; and that factors which may be of importance as such matters as whether the man providing the services provides his own equipment, whether he hires his own helpers, what degree of financial risk he takes, what degree of responsibility for investment and management he has, and whether and how far he has an opportunity of profiting from sound management in the performance of the task."

Again, he submitted, the evidence in these appeals was that all these factors showed an absence of a contract of employment. The evidence clearly showed that the workers provided their own tools and protective clothing, that they had hired helpers, that they at all times had the financial risk on themselves that if there was no work or if the weather made work impossible or too unpleasant then they did not get paid. He accepted that there was little scope for profiting from sound management, but they could and did profit from the efficient delivery of their services in that they were paid rates per day regardless of whether in the end the work took the full day.

He accepted that an argument against him was the decision of the employment tribunal in L Bligh and S Bligh v M A Lewis trading as MAL Scaffolding cases 1101861 and 1101862/2001/M. In both cases the tribunal decided that MAL Scaffolding was to pay a payment in lieu of paid annual leave on the termination of their employment. The tribunal gave summary reasons, Mr Lewis having been neither present nor represented at the hearing. That part of the summary reasons of relevance to these appeals states:

"The Tribunal heard evidence from Mr L Bligh with which his brother Mr S Bligh concurred. The Tribunal found that both applicants were employed by the Respondent as scaffolders. They were not in business on their own account. They were not entitled to delegate their work. They worked regular hours under the control of the Respondent. The Tribunal decided that the Applicants were both workers within the meaning of the Working Time Regulations 1998."

The key issue in that case had been holiday pay. The case was resolved by an out of court settlement on a without prejudice basis. Mr Smith also stressed that the finding of the tribunal was that the Blighs were "workers" within the meaning of a particular regulation, not that they were employees for all purposes. I understand, though I did not hear full argument on it, that the relevant regulation has its own, extended, definition of employee for the purposes of the benefits claimed by the claimants. They could be self-employed and also entitled to holiday pay. In addition, Mr Lewis did not attend the tribunal or give any evidence, nor were any arguments advanced on his behalf. I also note that in these proceedings it is common ground that only one of the Bligh brothers was a scaffolder not, as the tribunal found, both of them.

Ms Hodge agreed that the key tests were those in Ready Mixed Concrete and Market Investigations. In considering the issue of control in those tests on the evidence it was important to consider the control available, not what actually was exercised, and also that the exercise could be by third parties such as, in this case, site agents.

She also agreed about the need to establish a fundamental minimum of obligation. But it was important to restrict that to the obligation within each contract, not from one contract to the next. This had been emphasised by the Court of Appeal in Secretary of State for Employment v McMeechan [1997] IRLR 353:

"… In the circumstances of a specific engagement, however, there is nothing on which they [conditions … excluding mutuality] can operate. When it comes to considering the terms of an individual, self-contained, engagement, the fact that the parties are not be obliged (sic) in future to offer – or to accept – another engagement with the same, or a different, client must be neither here nor there."

The Court of Appeal also emphasised that employment tribunals were concerned with continuity of employment in many cases, but that cases about tax and National Insurance "were usually decided on an engagement by engagement basis and so the obligation to provide future work, that is vital before an employment tribunal, is irrelevant."

Ms Hodge considered a number of other factors, including the right to engage helpers or substitutes, the basis of payment, the provision of equipment, employee rights, personal factors, termination of contract, and mutual intention, although she did not rest a strong argument on any one of these. Rather, taking the facts as a whole, and on the evidence given to the hearing, she submitted that control was shown, and also mutuality, in all cases. These were not borderline cases, but cases where the evidence pointed firmly towards employment status. This was confirmed both by the statements made by individual appellants to the Commissioners during the investigation of the cases, and in the evidence at the oral hearing.

The factual relationship between MAL Scaffolding and the workers

There is no documentary statement of any weight about the relationship between Mr Lewis, in his capacity as the person owning and running MAL Scaffolding, and any worker. Nor is there any documentation of any evidential weight about that relationship. Nor is there any other evidence that such documents are or have been in existence at any time relevant to these appeals. Nor, I consider it right to add, is there any evidence that the absence of documentation is in any way intended for fraudulent or other illicit purposes. MAL Scaffolding was during the relevant period a growing business that Mr Lewis started from his own individual efforts but rapidly turned with minimum formality into a successful business. I find nothing suspicious from the standpoint of tax or social security in the absence of documents. I am aware that the business is now incorporated, and that documentation is now in place. But that is not directly relevant to these appeals. I find that no adverse conclusion should be drawn from the absence of the documents. But that absence tends to confirm the oral evidence that I was given that at that time neither Mr Lewis nor any of the workers (save for the Bligh brothers) wanted formal agreements. And that tends to suggest that the relationships were arms length relationships between independent contractors and not those of employer and employee.

There are a number of documents, and there is other evidence, of the way in which, after the period in question, the business developed. There is written information about a holiday pay scheme in 2003 and of more formal written contracts for services then and in 2004. There is a health and safety policy for MAL Scaffolding Ltd, the company Mr Lewis later set up. But they are all irrelevant to the current appeals. Indeed, as noted above, their later creation – and rejection by some individuals – also tends to confirm that there were no such documents or agreements in place at earlier dates.

Mr Lewis found his workers through former work contacts and contacts through existing workers. As the Appendix shows, there was no particular pattern to recruitments to the team of workers used by MAL Scaffolding. There is evidence of an advertisement for "scaffolders" "PAYE or CIS". But, as I have just commented about other evidence, it postdates the period relevant to the disputed assessments. In that case the advertisement was for a Surrey newspaper for one insertion in late April 2002. It is therefore irrelevant to contracts between MAL Scaffolding and any of the workers in these appeals.

On the evidence of Mr Lewis and the individual appellants, the rate of payment for work done was fixed on the basis of a daily rate. The evidence suggests that there was no formal system of parity between individual workers about the daily rate, and no regular review of the rates. It was a matter negotiated from time to time orally between Mr Lewis and an individual worker. Payment was made against a note of the days actually worked handed in by or for a worker at the end of a week. There was no hourly rate in this arrangement, and no guaranteed payment for each day of the week.

Several witnesses gave consistent evidence that if overtime was needed because of extra or new work, or work was wanted at weekends, then that would be negotiated at the time, usually by Mr Lewis offering an extra day's pay if a job was finished after usual hours, or a double daily rate for a day such as a Sunday. Again, there was consistent evidence that the daily rate was paid for what Mr Lewis regarded as a day's work. Sometimes that meant that the workers could leave site early. Sometimes it meant that they had to work extra time later, or the following day, to cover the work set. If any worker's work was rejected by a site agent as below the safety standards, then this had to be made good by the worker in his own time without extra payment.

With a few exceptions, all the work took place on the sites being run by main building contractors to whom MAL Scaffolding was supplying scaffolding services. The control of the site was in the hands of the site agent on behalf of the main contractor. The allocation of work on a site would usually be organised by Mr Lewis (and, when there, Mr Edwards). This would usually be done by a mobile telephone call between Mr Lewis and the worker. Typically, a worker would be asked to attend at a named site to perform specific scaffolding services under the direction of the site agent. On first attendance, the worker would report to the site office, and there get induction on site safety and other details, and agree the scaffolding work to be undertaken. Where the worker was a regular worker with MAL Scaffolding, Mr Lewis himself, or Mr Edwards, might take no actual part in any of the arrangements unless they chose to make a site visit or a problem arose. When done, the work would be signed off as safe, after inspection, by the site agent. This was done with the senior worker on site, although the evidence suggested that the papers (I saw none) bore the name of MAL Scaffolding. Completed work would be reported to MAL Scaffolding by mobile telephone, and most instructions as to jobs and locations were given that way.

The hours worked were those dictated by access to a site. Usually a site was open from about 8.00 am to about 4.00 or 5.00 pm. Within that period building trades generally recognised common times for a morning break and a lunch break. The workers had to observe the opening and closing times on most sites, and tended to observe the standard break times. But I heard evidence of work being done outside those hours where it was felt to be necessary to complete a job, and I heard no evidence that Mr Lewis dictated break hours. Rather, the system seems informally to have been based on a recognition on both sides of what was a fair day's scaffolding work. That would then be completed in the time it actually took, and, save for the availability of access to the site, that was for the workers to set, not Mr Lewis. Similarly, bad weather would occasionally require sites to be closed for safety reasons. On other days, the weather was unpleasant and the workers gave consistent evidence that they would decide if the weather was too bad for outside work that day. But if they did not work, they did not get paid. If only part of a day was missed, then that was made up. The evidence points to little control by Mr Lewis in addition to the control that would apply to any employee or self-employed workman on a site to meet site safety rules. The only other control was between the workers themselves in that labourers would work with scaffolders to help them.

Mr Lewis sent two workers on a scaffolding course during the relevant period. That apart, there was no evidence of technical or safety training other than that on site induction. Scaffolders were assumed to have the relevant qualifications on recruitment. Labourers needed no additional skills.

There was consistent evidence that the workers considered themselves to be self-employed. They accepted that the tax and NI liability was theirs. They also accepted that they were not entitled to sick pay or holiday pay. That was evidenced by Mr Wayne Day, who was unable to work for a period because of an injury. He accepted that he did not expect to be paid during that period. Further, when he returned to work he was for a period paid a lower daily rate on the grounds that he could not deliver the previous level of services to warrant the previous full rate he had been earning. This went against other evidence by Mr Day that he regarded Mr Lewis as his boss. That other evidence included evidence that he had worked in the MAL Scaffolding yard at times when there was no work available for him on site. No scaffolder gave evidence of that nature.

MAL Scaffolding provided the scaffolding to the sites on which services were being provided. This was usually delivered by the MAL Scaffolding driver, who was not one of the workers. MAL Scaffolding also had three vans. These were sometimes made available to help workers get to sites some distance from where they lived. All other equipment, including personal safety equipment and clothing, was provided by the workers themselves. They also provided their own mobile telephones, where they had them.

Was there a contract of employment?

Two general points should be noted before these facts are evaluated. Both distinguish these appeals, as a matter of practicality, from many of the cases cited. Courts and tribunals are often confronted by cases where the individual wishes to establish employment status, while the putative employer wishes to establish the opposite. Bligh v MAL Scaffolding was one of those cases. These appeals have the unusual common feature that both the alleged employer and the alleged employees appealed, and gave largely consistent evidence in support of their appeals, that there was no employment relationship. The tenor of the evidence from not only Mr Lewis, but also most of other witnesses was that they did not regard themselves as in an employer-employee relationship. This included witnesses who gave evidence only after being subject to a formal witness summons to attend. Mr Edwards had at first disputed that he was an employee, a factor to be borne in mind when assessing the weight to be given to his evidence. Mr Pocock, whose evidence in my view was somewhat inconsistent, took the view that Mr Lewis was his boss, but also appeared on the facts to have accepted a relationship with Mr Lewis that was not that of employer and employee. Mr Horan and Mr State were clearly of the view that they had not been and would not have wanted to be employees. And they also clearly understood what that meant for them in terms of advantages and disadvantages to them.

The other factor was a complete absence of any contractual or similar documents. This is not a disguised allegation of impropriety between MAL Scaffolding and the workers. I have already noted that the Commissioners accepted that the well-established procedures for collecting tax from self-employed sub-contractors were fully in place so far as necessary. So this was not, in the years from 1999, an allegation of tax avoidance by failure to deduct tax or keep records. It was, simply, that the relationships between Mr Lewis and the workers were not written down in any constitutive document.

I consider it particularly important to note that fact in view of the case law cited. Most of those cases were, at least to some extent, arguments about the meaning and effect of terms in written documents. The third of the three conditions laid down by MacKenna J, in its formulation, assumes – as in that case – that there is some contract with "other terms" in it. In these cases any such other terms must be derived either from verbal agreement or from custom and practice. My conclusion on the facts is that it is difficult to identify any such term. There was no holiday pay, no sick pay, no set hours other than the hours of a particular site, no standard rates of pay or standard arrangements for overtime, no obligation to provide or undertake work, no period of advance notice that no work would be available, no notice period for absences during a period of work, and no notice period to end the relationship on either side.

Both these points were reinforced in the evidence of both Mr Lewis and the workers that gave evidence. The oral evidence of Mr Lewis was firmly based on the approach that he was not employing anyone at the relevant time save his secretary, the lorry driver (whose case was not before me) and Mr Edwards. His task was providing scaffolding services to large domestic building sites in the south east of England. He ran a profitable business in ensuring that timely scaffolding services were provided on the building sites to which he was contracted as and when needed. And he did that by working with others who actually provided those services. He also provided the scaffolding equipment to the sites again as and when needed. But he had no separate agreements to hire or lend scaffolding. The materials were provided without extra cost and without any additional agreement between him and the main contractors with whom he worked. The only other materials he provided was the use of up to three vans. The work was all work done on clients' sites, and the vans were used to help the scaffolders and labourers get to those sites.

Nor did any of the individual appellants give any clear evidence that in their view they were or should have been employees. The tenor of the evidence given by Mr Ison (senior scaffolder), Mr State (scaffolder), and Mr Horan (scaffolder) were all consistent with the absence of any defining contractual relationship between Mr Lewis and any of them, whether that contract was of service or for services.

Mr Pocock and Mr Wayne Day were both labourers but again there was no such defining contractual relationship. Mr Wayne Day gave evidence that when he could not work as a result of an injury he did not receive any pay. And when he went back to work, it was at a lower daily rate to reflect the fact that he was not providing as much work as previously. Mr Day also gave evidence that he had been encouraged to join a holiday scheme. But that was in mid 2003, and is of no relevance to this decision save that it indicates that there was no such scheme before then. He also indicated that he was asked to sign a contract with MAL Scaffolding at Christmas 2004 but that he had refused to do so and had not received any work since then. Again, these facts are long after the periods in question in these appeals. Mr Day's refusal to sign tends to confirm the fact that he did not expect or want to be under any particular agreement even at that date. The evidence of Mr Edwards also showed that, as noted above, there were a number of matters in the relationship between MAL Scaffolding and the workers of which he had limited knowledge and input, and again there was no underlying statement of obligations on either side to which he could refer.

My conclusion is that test (iii) of the Ready Mixed Concrete tests brings forward no individual term suggesting a contract of employment but several separate factors suggesting that the relationship between MAL Scaffolding and the workers was, in the legal sense, a relaxed verbal agreement for services with few clear terms.

Did Mr Lewis control the workers, in the sense required for test (ii) by MacKenna J? Behind my findings about the pattern and methods of work was something explored less in the evidence, but touched on a number of occasions and probably illustrated by the details of who worked for MAL Scaffolding for short periods. I formed the clear impression from the evidence that Mr Lewis had recruited a series of individuals who were, like him, prepared to work hard and well. He provided them with the opportunities to work and, at least in some cases such as that of Mr State, with a rate of pay that was somewhat above the market rate. They provided him – or those with whom he contracted to supply scaffolding services – with reliable, expert and timely scaffolding services within the hours worked by the sites to which he and they supplied their services, and within the pattern of work that the site agents set for those sites. And if they cut some corners to deliver the services on time – or before time – and the site agents were content, then so was Mr Lewis. If they did not do that, then he simply did not provide them with any more work.

The fact that both Bligh brothers found themselves without any further work on 10 August 2001 suggests that, as does the fact that they took action for holiday pay and nothing else. There is, for example, no indication in the case why both brothers had ceased to work with MAL Scaffolding on the same Friday and no indication that the tribunal had any evidence before it other than the unchallenged oral evidence of the two brothers. Mr Wayne Day ceased to be "on the books" when he was injured. Mr Walker and Mr Wright, both named as third parties in the appeals, were "on the books" for a very few weeks. What was completely missing from the evidence was any sense of continuity in the relationships between MAL Scaffolding and any of the workers save where it was the mutual recognition that each could provide the other with the services, or opportunity to profit from those services, that each knew the other could deliver.

I agree with the argument for the Commissioners that the relationship has to be looked at within the time limits within which it operated, and not merely by reference to an extended time when it did not operate. Was there a contractual nexus within those limited confines of the kind that met the other two Ready Mixed Concrete tests? Given the evidence summarised above, the application of the control test does not in my view give a clear answer. As already noted, control in terms of hours worked was dictated not by MAL Scaffolding but by the hours on which the sites were open. That is neutral to the status of the workers as employed or self-employed. In particular, I do not accept the argument that the site agents could be regarded as carrying out the control function over the workers for MAL Scaffolding, the site agents have independent statutory safety obligations that apply to employee and self-employed worker alike. Times of breaks were also neutral to this. The workers were – with extremely limited exceptions – not working on premises controlled by MAL Scaffolding or within hours controlled by MAL Scaffolding. And I accept the evidence that some at least of the workers approached the matter on the basis that when they had done a job they left the site. What else should they or could they do, as a matter or practicality, given that they were there to provide specialist services and would be required to leave for safety reasons when not providing those services?

While, accepting the evidence of Mr Edwards, I consider that Mr Lewis somewhat played down the extent he kept an eye on the quality of work of new workers in particular, I do not accept that there was a control regime in place of the kind that suggested an employer-employee relationship. Mr Lewis's solution to the problem, if he did not like the work of a worker, or did not think that the worker was keen enough to accept the work offered, was not to discipline or train or persuade the individual, but to ask that person to remedy any defect (which they themselves expected to do without extra pay) or to ask someone else to do it and not to offer that person any more work. And there was nothing in the relationship between the two that stopped that in the way a normal employment contract would limit it. With established workers such as Mr State, Mr Isted and Mr Horan, the evidence I heard suggested a complete absence of any of the "control" that I would expect between an employer and employee. As Mr State said, in my mind convincingly, "No one tells me how to do the work. I work as and how I want to."

Both Mr Smith and Miss Hodge spent some time drawing out evidence from the witnesses about whether they were able to substitute others for themselves when providing services. There was evidence that I accept that on one occasion a substitution occurred and that on another occasion the scaffolders brought along their own labourer. The later incident was as part of the work done by the Day family, who clearly worked together on jobs as a team. Other workers claimed that they felt they could have done this but chose not to. I do not put much weight either on the incidents when substitution or addition did occur, or when it did not. I do so because I find that there is another explanation why a scaffolder might be reluctant to supply services through another person. That was essentially what MAL Scaffolding was itself doing, so any sub-supply would cut across Mr Lewis's own activities. But also I find Mr State's evidence persuasive that he would take the work he could do, and do it, and that he did not want to delegate or lose the work or money.

My conclusion

I do not rest this analysis of the facts on what Mr Smith termed the "knockout blow" approach. Rather, I have examined each of the pointers set out by MacKenna J and Cooke J in their well known judgments. I have indicated above that I find the third of the tests posed by MacKenna J of the "other terms" to be largely without a material context in these appeals. I have found the arguments about control not to offer a clear cut solution by themselves, and I have found no clear pointer to an employer-employee relationship in the methods of payment and delivery of services undertaken.

As I have no relevant documentary evidence at all, my conclusion must be reached on all the facts as evidenced to the Commissioners and to me. I have no other evidence. It is clear from all the evidence that there is no standard contract here, and there are no standard terms. Each individual relationship between MAL Scaffolding and a worker stands to be judged on its own facts. In that context, it is entirely possible that one worker performing a function may be an employee while another, working alongside that first employee, does so as a provider of services.

But in these appeals, save for specific individuals I consider below, I find nothing in any of the relationships that rises to the level of that irreducible minimum to which reference has been made in the cases. The Commissioners appear to have approached their investigations on the basis that there must be an employment relationship between MAL Scaffolding and the workers there if one looks hard enough. Officers then went looking on that basis and persuaded themselves that they had found that for which they went looking. They have totally failed to persuade me. More formally, I am persuaded on all the evidence and on the balance of probabilities that the usual form of relationship between MAL Scaffolding and a worker at that time was that of an informal and undocumented verbal contract for services and not any form of contract of service.