Background

In the case of MyPay Limited v HMRC, MyPay operated as an umbrella company supplying workers to end-user organisations through recruitment agencies. The workers undertook assignments across a range of sectors, including healthcare, engineering and the wider public sector.

The workers were engaged by MyPay and entered into written statements setting out the terms of their employment. They then secured individual assignments through recruitment agencies, with the agency contracting with MyPay for the worker's services.

A dispute arose over travel expense payments made by MyPay to workers travelling from home to their assignment locations. The tax treatment of those payments depended in part on whether the workers were employed continuously by MyPay or whether each assignment constituted a separate employment.

Tribunal decision

The First-tier Tribunal concluded that the workers were not employed under a single continuous contract covering periods between assignments. Instead, each assignment gave rise to a separate period of employment.

The key issue was whether sufficient mutuality of obligation existed during gaps between assignments. The Tribunal found that it did not.

Although MyPay undertook to try to find work for workers, it was not obliged to provide work and workers were not obliged to accept it. If a worker was not on assignment, they could not require MyPay to provide work or wages. Equally, MyPay could not require them to perform work.

The Tribunal...

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