On 13 June 2019, the First-tier Tribunal held9 that similar (but not identical) short-term engagements between a single personal service company and two hospitals, when considered separately, should be taxed differently under the ‘IR35’ rules.

The company provided the services of a urologist to two hospitals.

The Tribunal concluded that a hypothetical contract between the urologist and the Royal Berkshire Hospital (RBH) would be considered to be a contract of employment. A hypothetical contract between the urologist and the Medway Maritime Hospital (MMH), on the other hand, would be one of self-employment

There was a written contract between the personal service company and MMH. It contained a right for the company to provide a substitute to MMH. The Tribunal decided that this was not an “illusory” right. No such right existed as regards the supply to RBH.

In addition, the MMH contract contained no obligations around minimum hours of work and included a one day’s notice provision. The hypothetical contract with RBH would, in the Tribunal’s view, have included a week’s notice clause and a 30-40 hour week requirement.

These factors, on balance, led the Tribunal to reach its conclusion that the engagement with RBH was, for tax purposes, akin to employment (unlike the engagement with MMH). On each of these 3 factors, the MMH engagement pointed away from employment.

The decision can be viewed here.