Case Number: TC 09902
By remote video hearing
Appeal reference: TC/2019/05706, TC/2020/03534
INCOME TAX AND NATIONAL INSURANCE CONTRIBUTIONS – deductibility of travel expenses – taxpayer was umbrella company providing employment to workers working on limited-duration assignments – was the taxpayer’s engagement of the workers one continuous employment, or a new employment each time the worker went on assignment?- common ground that taxpayer had employment contract with workers when they were on assignment – issue was whether there was employment contract when workers not on assignment – was there sufficient mutuality of obligation in such periods? – Held: no, there was not – alternative argument based on dispensation given to taxpayer by HMRC – were travel expenses included within it? – Held: no they were not – appeal dismissed
Heard on: 9-11 March 2026
Judgment date: 02 June 2026
Before
TRIBUNAL JUDGE ZACHARY CITRON
TRIBUNAL MEMBER SIMON GILLESPIE-KHAN
Between
MYPAY LIMITED
Appellant
and
THE COMMISSIONERS FOR HIS MAJESTY’S REVENUE AND CUSTOMS
Respondents
Representation:
For the Appellant: Rebecca Murray of counsel
For the Respondents: Sadiya Choudhury KC and Laura Ruxandu of counsel, instructed by the General Counsel and Solicitor to HM Revenue and Customs
DECISION
Overview and issues
MyPay’s business was to employ workers who undertook fixed-period assignments for “end-user” businesses in a wide range of sectors, including the NHS, other public sector bodies, and private engineering companies. The core terms of each assignment – what kind of work was involved, how long it lasted, and the pay terms – were agreed between the worker, individually, and a recruitment agency acting for the “end-user” business; the recruitment agency then contracted with MyPay for provision of the worker’s services for the assignment, and MyPay performed its obligations under that contract by procuring that the worker, its employee, performed their duties under the assignment. MyPay took a percentage of the payment for the assignment provided by the recruitment agency (which in turn had its own payment arrangements with the “end-user” business).
MyPay’s business model, as just briefly described, was typical of “employment intermediaries” or “umbrella companies” in the contract worker sector.
The primary issue in the case was the deductibility of reimbursement payments made by MyPay to the workers it employed in respect of travel expenses incurred in the course of one of the assignments; on the terms of the relevant legislation, this in turn depended on whether each assignment was a separate employment by MyPay of the worker, or whether there was one continuous employment of the worker by MyPay, that endured even when an assignment ended, and incorporated any subsequent assignment(s). An alternative way of expressing this issue is whether or not MyPay had a single “overarching” contract of employment with its workers.
The secondary issue in this appeal (argued by MyPay in the alternative, if it was not successful on the primary issue) is whether the travel expense reimbursement payments were outside the scope of tax by reason of a dispensation given to MyPay by HMRC under s65 (this and other references to “s” or “section” being to sections of the Income Tax (Earnings and Pensions) Act 2003; and references to “Parts” are to Parts of that Act).
In the course of this decision, certain words and phrases are highlighted by bold underlining, thus. Unless otherwise indicated, this emphasis is ours (rather than in any original text being quoted), as we use this as a device to more clearly explain our reasoning.
Appeal details
MyPay’s appeals were against
determinations of unpaid tax (under regulation 80 of the Income Tax (Pay As You Earn) Regulations 2003) (made in 2019 and 2020) charging tax of £286,556 and £330,381 for the tax years 2014-15 and 2015-16 respectively, and
a decision (made in 2020) charging national insurance contributions (under s8 of the Social Security Contributions (Transfer of Functions) Act 1999) of £1,692 in respect of both of those years.
The determinations and decision were made in respect of payments by MyPay to workers in reimbursement of travel expenses incurred by the workers in the course of carrying out assignments.
Issues in the appeal, in more detail
It was common ground that a contract of employment existed between MyPay and a worker when that worker was engaged on an assignment.
MyPay contends that the travel expenses-reimbursement payments were deductible under s338 (the text of which, and of s339 and s65, is set out in the Appendix to this decision). That is, they were not expenses of ordinary commuting i.e. travel between the worker’s home and a permanent workplace, defined in s339 to mean, in relation to an employment, a place which the employee regularly attends in the performance of the duties of the employment, and not a “temporary workplace” (defined, again in relation to an employment, as a place which the employee attends in the performance of the duties of the employment (a) for the purpose of performing a task of limited duration, or (b) for some other temporary purpose); nor were they “travel between any two places that is for practical purposes substantially ordinary commuting”. This is because (MyPay contends) a worker’s engagement by MyPay was a single, overarching contract of employment, such that the employment spanned over, and included, the periods when the worker was working on assignments, as well as the periods between those assignments.
HMRC contend that the contractual arrangements between MyPay and the workers were such that there were separate “employments” in relation to each assignment. In particular, HMRC contend that during the periods between assignments there was no “employment” (or contract of service) in place between MyPay and the worker. Accordingly, the workplaces in relation to each assignment were “permanent workplaces”, and the travel expenses were not deductible.
It was common ground that the primary issue in the appeal (deductibility of the travel expense reimbursement payments under s338) turned on the points just described i.e. whether or not each assignment was a separate employment.
In understanding the primary issue, we note
that s4 provides that “employment” includes, in particular, any employment under a contract of service; and
(although we were not taken to this case) the authority in Nolder (HMIT) v Walters 15 TC 380 at 388 (a decision of Rowlatt J) that travel expenses include subsistence expenses:
… The Solicitor-General and Mr. Hills very fairly agree, and I think it always has been agreed, that when you get a travelling office, so that travelling expenses are allowed, those travelling expenses do includethe extra expense of living which is put upon a man by having to stay at hotels and inns, and such places, rather than stay at home. Of course his board and his lodging in a sense, eating and sleeping, are the necessities of a human being, whether he has an office, or whether he has not, and therefore, of course, the cost of his food and lodging is not wholly and exclusively laid out in the performance of his duties, but the extra part of it is. The extra expense of it is, and that is the quite fair way in which the Revenue look at it. …
In the alternative, MyPay contends that a deduction from earnings was permitted in respect of its payments in relation to travel expenses, pursuant to the dispensation given by HMRC to MyPay under s65 and dated 2 July 2008. HMRC accept the validity of the dispensation and that it was not revoked, but contend that the dispensation does not apply to the travel expenses in question.
A third issue in the appeal, as to whether the tax determinations were made to the best of HMRC’s judgment, fell away in the course of the hearing. However, towards the end of the hearing, there was a request by MyPay that, if the Tribunal were to dismiss the appeal, we give HMRC the opportunity to reduce those determinations if, on the basis of further evidence provided by MyPay since the determinations were made in 2019 and 2020, HMRC saw fit so to do.
The bundle and the hearing
The hearing bundle ran to 5,924 pages and was divided into sections as follows:
A: the assessments under appeal
B: review conclusions under appeal
C: pleadings and directions
D: key documents: the dispensation dated 2 July 2008; undated ‘Statement of main terms and conditions of employment’ labelled as the “dispensation contract” (12 pages); ‘Statement of main terms and conditions of employment’ dated 22 May 2014 (14 pages); RTI document; ‘Statement of main terms and conditions of employment’ labelled as the “pre April 2014 contract” (12 pages); ‘Statement of main terms and conditions of employment’ labelled as the “post 2014 contract” (14 pages)
E: three witness statements of Stephen Hollins (including 93 attachments), and witness statement of Officer Beggs
F: correspondence and meeting notes as between MyPay and HMRC officers, from September 2014 through to April 2021
G: correspondence relating to HMRC’s enquiry, from November 2014 through to July 2018
H: MyPay’s complaint: correspondence between August 2016 and July 2018
I: complaint correspondence involving a Member of Parliament, 2018-2019
J: adjudicator correspondence
K: letters from HMRC to workers asking about their terms and conditions with MyPay, from 2016 to 2018
L: follow up letters from HMRC to workers, 2016-2018
M: HMRC’s notes of interviews with workers, 2016-2018
N: MyPay’s expenses forms and policies
O: correspondence relating to a “sample check” by HMRC: 2018
P: FAQ document of MyPay
Q: ADR correspondence
R: MyPay’s ‘Guide to finding your next assignment’
S: material relating to statutory sick pay: 2021-2022
T: payslips and records
U: correspondence relating to a particular worker
V: pension policy documents
W: Companies House documents
X: ‘Statement of main terms and conditions of employment’ dated May 2014 (14 pages); ‘Statement of main terms and conditions of employment’ (date redacted) (12 pages)
Y: Tribunal documents and correspondence: 2019-2024
Z: unsuccessful application for permission to appeal against a decision of the Tribunal of 29 June 2023, refusing MyPay’s application to amend its grounds of appeal by adding an additional ground (that if HMRC’s Autoclenz approach was correct then there was no contract of employment at all between MyPay and the workers).
Both Mr Hollins – the managing director of MyPay, and a director of MyPay since the business was incorporated and began trading in 2007, as well as the principal contact with HMRC throughout their enquiries – and Officer Beggs gave oral evidence at the hearing and were cross examined.
The form of the hearing was V (video) by Teams. We were satisfied that it was fair and just to hold the hearing in this manner. Prior notice of the hearing was published on the gov.uk website, with information about how representatives of the media or members of the public could apply to join the hearing remotely in order to observe the proceedings. As such, the hearing was held in public.
Findings of fact
MyPay’s business model
The business model in which MyPay operated was as follows:
MyPay’s workers undertook limited-duration work for “end user” businesses, known as “assignments”. The duration of an assignment ranged from a day to many months. It was not unusual for an assignment to last for six months or a year.
The background to, or ‘chain’ of commercial events leading to, the creation of an assignment was as follows: an “end user” business engaged a recruitment agency seeking a worker of a certain kind for a limited duration of time. The recruitment agency then found a worker for the assignment using its network of individuals who were looking to do assignment-based work of this type. The recruitment agency agreed, with the worker, the type of work to be done, the duration of the work, and the pay.
It was at this point in the commercial ‘chain’ that MyPay became involved; and the reason it became involved, is that the recruitment agency did not itself want to enter into a relationship of employer in relation to the worker. It was MyPay’s role to employ the worker, and procure that the worker carried out the assignment on the terms that had been agreed between the worker and the recruitment agency. MyPay’s commercial role in the market, or in the commercial ‘chain’ we have described, was to employ workers undertaking this kind of assignment-based work and, thereby, to undertake the tax and other legal responsibilities of an employer (which neither the “end-user” business, nor the recruitment agency, wished to undertake).
The recruitment agency therefore contracted with MyPay (for provision of the worker to perform the assignment) and MyPay, as the worker’s employer, provided the worker for the assignment. MyPay retained a percentage of what the recruitment agency paid it for the assignment – the rest went to the worker, as wages paid by MyPay to the worker.
Thus, in summary, the way the market in which MyPay operated worked was
the workers and the recruitment agencies generated the specific assignments – MyPay did not; but
once a specific assignment had been so generated, legal relationships were entered into such that MyPay contracted with the recruitment agency to provide the worker, and MyPay fulfilled that obligation by procuring that the worker, its employee, did the work.
Further findings about workers and assignments
We observe, and find as a fact, that assignments were created on the initiative of workers. This was reflected in what happened when a worker, for whatever reason, did not, at the end of one assignment, arrange a new assignment for themselves, which was as follows:
MyPay kept track of workers who were not “on assignment” for two consecutive pay periods; it contacted a worker if this happened, and encouraged them to arrange a further assignment. The evidence included a 6-page document entitled MyPay “Guide to finding your next assignment”. The first page was headed “Is your assignment coming to an end?” and then said this:
As your assignment starts getting towards its end date or when you have received or given notice on a current assignment, it is only natural you start thinking about your next assignment with MyPay.
As a MyPay employee this document will detail ways in which you can help secure your next assignment. With more and more opportunities opening up through current contacts, word of mouth and online, it is important to understand and utilise these to your benefit.
The next page was headed “Keeping your CV up to date”. It then said this:
It is always important to ensure that your CV reflects all the skills and experience you have gained and that you can bring to future assignments.
It is important to keep this up to date to include your latest experience within your current assignment.
It is always important to tailor your CV to best showcase your abilities for the assignments you are applying for.
If you require further help with up-dating your CV, please contact your Account Manager who can assist.
The next page, headed “Word of mouth”, said this:
During your current and previous assignments it is possible that you may have heard of business opportunities that would allow you to work on further assignments through MyPay.
We always recommend keeping in touch and advising your contacts when you would be available to work.
By ensuring people are aware of your availability such as previous clients, recruiters and people you have worked with will maximise your chances of hearing about future opportunities.
The fourth page, headed “Internet marketing”, said this:
The Internet is very useful tool for helping to source future assignments. Historically, this has involved job boards, recruiters websites etc. Whilst this is still very much the case, it would be a mistake not to consider the opportunities provided by social media such as Facebook, Twitter and LinkedIn.
MyPay always advise to keep your LinkedIn profile up to date and to make connections with people who you have had business with the past.
By keeping this up to date and checking the posts of your connections, this can help you hear about future potential assignments.
The last page, headed “Talk to us”, said: “If you would like more information, please get in touch” and then stated a phone number, an email address, and MyPay’s website address.
We observe, and find, on the basis of this evidence, that, whilst MyPay would encourage workers to arrange new assignments themselves, it could do no more than this; this was because it was the workers, and not MyPay, who arranged new assignments.
It was not unusual for a worker to finish one assignment and “immediately” start another one (we put “immediately” in square brackets because, what we really mean, is that they would start the next assignment on the next working day, or after a short holiday break; but from a ‘working life’ point of view, the transition from one assignment to another was “immediate”). This also meant that whilst a worker was on one assignment, it was perfectly possible, and indeed not unusual, for a subsequent assignment (to start shortly after the worker’s current assignment finished) to be arranged for that worker, as between the worker, the recruitment agency, and MyPay, in the manner just described (so facilitating the worker going from one assignment “immediately” to the next).
Statements of main terms and conditions of employment as between MyPay and workers
MyPay entered into a written document (to which we will refer as a “Statement”) entitled ‘Statement of main terms and conditions of employment’ with each worker; there were two principal versions of the Statement in the evidence, one used for Statements entered into pre-2014, the other for Statements entered into post-2014 (reflecting the fact that MyPay made certain changes to the Statement terms in May 2014- the driver for those changes, according to MyPay, was certain pension provisions coming into force in May 2014); where the versions varied in a way material to our analysis, we indicate this in the findings that follow.
Statements began with the following:
This Statement is given to you in accordance with the provisions of the Employment Rights Act 1996 and the Employment Act 2002. Its purpose is not only to comply with the law, but also to clarify arrangements already in existence, and to provide clear guidance to you and [MyPay] as to each party’s rights and obligations.
What Statements had to say on the core issues of mutual interest to MyPay and its worker
We find it helpful to first make findings about what Statements had to say in relation to certain core issues of mutual interest to MyPay and the workers i.e.
what work was required of the worker;
when was that work to be done, and where; and
what was the worker to be paid, and when.
We shall refer to these as the “core issues”.
What work was required of the worker
There was an “Appointment” clause which stated the worker’s “job title” – in the example Statements in the bundle, the “job title” was “medical worker”. Statements referred to the worker, in addition to their “normal duties”, agreeing from time to time to undertake “additional and/or alternative duties” “reasonably required” by MyPay “to assist in the efficient running of [MyPay’s] business”; pre-2014 Statements said that the worker’s “duties” were those listed in an attached “job description” (however, the Statements provided in evidence had no such attachment); post-2014 Statements did not refer to such an attachment; neither did they specify what the worker’s “normal duties” were. The “Appointment” clause also specified whom the worker was to “report to”: Mr Hollins or such other person as notified by MyPay.
When and where the work was to be done
The “Place of work” clause in Statements said there was no fixed place of work and that MyPay would inform workers from time to time of the premises or site where they would be required to work. The clause also said that MyPay would “endeavour to provide [the worker] with work and procure work for [them] at various sites during the course of [their] employment.”
The “Hours of work” clause in post-2014 Statements said that the worker’s “weekly working hours and days” would vary “from week to week” to meet clients’ needs and to meet “changing business and/or operational requirements”; it also said that MyPay guaranteed that it would offer a minimum of 336 hours of work during each calendar year.
The “Hours of work” clause in pre-2014 Statements said that the worker’s working hours “may be varied” by MyPay to meet clients’ needs and meet changing business requirements. It did not include MyPay guaranteeing to offer any minimum number of hours of work.
Pay
The “Wages” clause in Statements said that the worker’s pay would be “performance related” and would “be agreed” between MyPay and the worker and calculated according to fees charged by MyPay to its clients (but that the worker would always receive at least the minimum wage for the hours they worked). Pay would be weekly in arrears. MyPay would review the worker’s rate of pay at its discretion. No figure was stated as to the amount of pay to which the worker was entitled.
Our observations on the clauses touching on core issues
We observe that Statements provided few if any specific details about the core issues: they included no figure as to what the worker would be paid; nor did they specify the hours and days on which, or the place at which, the worker was required to work. MyPay “endeavoured” (a word which, we note, falls short of legal obligation) to provide the worker with work, and, in post-2014 Statements, guaranteed to “offer” a minimum of 336 hours of work a year. The kind of work to be done was described by means of a generic job title (“medical worker”); there was reference to an attached “job description” in pre-2014 Statements (but none was provided in evidence); post-2014 Statements referred to, but did not specify, the worker’s “normal duties”.
We find that the reason that Statements were so non-specific and non-directive as to the core issues was that, under MyPay’s business model (which, we find, was well understood by workers, as well as MyPay, at the time Statements were entered into), these matters were settled and agreed on an assignment-by-assignment basis.
Other clauses in Statements
The “Lay offs and short term working” clause in post-2014 Statements said that in the event of a downturn in work and therefore a reduction in MyPay’s requirements for work of a kind the worker was employed to do, MyPay reserved the right not to provide the worker work (“lay them off”), or reduce the worker’s hours of work (put them on “short term working”) and ask that they remain at home without pay (pre-2014 Statements dealt with lay off only); the post-2014 clause said the worker may be entitled to statutory guarantee payments for the time the worker was laid off or put on short term working but, for the avoidance of doubt, the worker would not have any contractual entitlement to pay during those periods
The clause entitled “What we expect from you” said that the worker must comply with all reasonable and lawful instructions and requests of their account manager or a director of MyPay, and follow MyPay’s rules and procedures; that the worker must devote their whole time, attention and abilities to their duties during their working hours; that the worker must report to any director or account manager when required. It also said that the worker was asked to inform a director if they undertook any work outside their contracted hours of work; it said that it was important that MyPay was aware of any work the worker did, so it could be satisfied that the worker was complying with other clauses in the Statement, but also from a health and safety point of view, to ensure the worker was not working excessive hours and putting themselves and/or other employees at risk.
The “Holidays” clause provided for a 28 day holiday entitlement; it provided for “rolled up” holiday pay (an addition to weekly wages) representing payment in advance for time later to be taken off as holiday (and so no payment would be received during the holiday itself).
The “Other time off” clause related to “time off work” required by the worker for reasons other than holiday, sickness/injury or exercise of leave rights under legislation. It said the worker was only permitted to take other time off with MyPay’s permission.
There were other clauses in the Statements dealing with:
Commencement
Probationary period
48 hour week opt out
Wage deductions
Pension
Sickness policy
Termination
Retirement
Confidentiality
Disciplinary and grievance procedures
Collective agreements
Data protection
Changes to terms of employment
Non-enforcement does not waive MyPay’s rights
Severability, whole agreement and jurisdiction
What we made of the evidence, in coming to our findings of fact
Our findings about MyPay’s business model are based on Mr Hollins’ evidence, written and oral. This is unsurprising, as he was the only witness with first hand experience of these matters. We found him a reliable witness as to relevant matters of fact of which he had first hand knowledge; we have italicised some of the preceding words because a significant amount of his written evidence was either detailed narrative of MyPay’s enquiries from, and litigation with, HMRC (which was of limited relevance to the findings of fact above, although they had some relevance to the issue concerning MyPay’s dispensation), as well as Mr Hollins’ opinions on the issues of law and evaluative judgement before this Tribunal (in other words, not evidence of fact). Whilst we have considered these latter aspects of Mr Hollins’ evidence, we have not found them of assistance as to our fact-finding.
Mr Hollins’ evidence included the results of a questionnaire Mr Hollins sent to 171 workers in 2022-2023. We have placed little weight on this evidence as the exercise was conducted many years after the tax period in question, and furthermore was not conducted in a face to face manner, giving rise to the possibility of material ambiguity in the questions asked and answers given. Moreover, the Tribunal had no opportunity to ask our own questions (of those surveyed) to clarify matters. We note, however, that our putting little weight on this evidence, is not adverse to MyPay, as Mr Hollins’ survey results were, at best, ambiguous and neutral to MyPay’s case, and, at worst, favourable to HMRC’s.
We found Officer Beggs’ witness statement and oral evidence of limited assistance to our fact-finding, as she did not have first-hand knowledge of MyPay’s business and how it operated, and had not been involved with the granting of the dispensation to MyPay in 2008. For similar reasons to those we have just given in relation to Mr Hollins, we did not find Officer Beggs’ evidence of value to our fact-finding, to the extent it was her opinions on the issues of law and evaluative judgement before this Tribunal.
Case law
The Supreme Court’s summary of the case law on contracts of employment in PGMOL
The decision of the Supreme Court in HMRC v PGMOL [2024] UKSC 29, issued on 16 September 2024, provides a helpful guide to the classic cases on contracts of employment. The Supreme Court said this at [28], [37], and [38]:
The starting point in deciding whether there is a contract of employment has often been taken to be the judgment of MacKenna J in Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance [1968] 2 QB 497 (“RMC”): see, for example, Autoclenz, where at para 18 Lord Clarke called it “the classic description of a contract of employment”.
….
At p 515, MacKenna J set out the elements of a contract of employment:
“A contract of service exists if these three conditions are fulfilled. (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 its being a contract of service.”
As regards the first condition (mutuality of obligation), MacKenna J emphasised the need for an employee to provide his or her own personal service, in consideration for payment:
“There must be a wage or other remuneration. Otherwise there will be no consideration, and without consideration no contract of any kind. The servant must be obliged to provide his own work and skill. Freedom to do a job either by one’s own hands or by another’s is inconsistent with a contract of service, though a limited or occasional power of delegation may not be: see Atiyah’s Vicarious Liability in the Law of Torts (1967) …”
The section of the Supreme Court’s judgement under the heading “Mutuality of obligation” begins at [40]:
It is an essential element of a contract of employment that the employee provides his or her personal service for payment by the employer. This requirement has been variously described, for example as “the wage-work bargain”: see Cotswold Developments Construction Ltd v Williams [2006] IRLR 181, para 48 (EAT, Langstaff J). This perhaps more clearly pinpoints its focus than the usual but bland term “mutuality of obligation”, which could be applied to all bilateral contracts of any description. However, in this case, as in many others, it has been adopted as the label for the first pre-requisite of any contract of employment and, with some reluctance, I shall also use it.
….
… reference was made to a number of authorities in which judges have spoken in terms of the need for obligations to provide work or payment in lieu and to provide personal service. It was said that the clearest enunciation of this was in the judgment of Dillon LJ in Nethermere (St Neots) Ltd v Gardiner [1984] ICR 612 (“Nethermere”) at pp 632 and 634:
“It is said nonetheless that there is one sine qua non which can firmly be identified as an essential of the existence of a contract of service and that is that there must be mutual obligations on the employer to provide work for the employee and on the employee to perform work for the employer. If such mutuality is not present, then either there is no contract at all or whatever contract there is must be a contract for services or something else, but not a contract of service. So it is submitted in the present case that there is no evidence of any mutual obligations.” (p 632)
“For my part I would accept that an arrangement under which there was never any obligation on the outworkers to do work or on the company to provide work could not be a contract of service.” (p 634)
As is the case of every passage extracted from a judgment, it is important to read it in the context of the facts and issues of the case. The issue in Nethermere was whether two individuals, who were part-time homeworkers who sewed garments manufactured by the appellant company, were employees of the company, and so had standing to bring proceedings for unfair dismissal. The company’s case was that they were self-employed. It is critical to note that it was not argued that a separate contract arose each time that the applicants accepted a batch of garments to sew. Such contracts would not have satisfied the requirement for the period of continuous employment required in order to bring a claim for unfair dismissal. Instead, it was argued that that there was an overriding or umbrella contract under which individual batches of garments were accepted by the applicants: see p 626 per Stephenson LJ.
The need to establish an overriding or umbrella contract arises when it is necessary to show continuing employment in the periods between individual assignments. This can be done only by demonstrating the continuing existence of mutual obligations to perform work, when required, and to pay for such work. As the EAT (Elias J and lay members) said in Stephenson v Delphi Diesel Systems Ltd [2003] ICR 471, para 12:
“Cases frequently have had to decide whether there is an overarching contract or what is sometimes called an ‘umbrella contract’ which remains in existence even when the individual concerned is not working. It is in that context in particular that courts have emphasised the need to demonstrate some mutuality of obligation between the parties…”
The existence of an overriding or umbrella contract was the issue in Nethermere, as it was also in Carmichael v National Power plc [1999] 1 WLR 2042 (HL). That case concerned part-time tour guides of power stations, who sought an order for the supply of the terms of their employment pursuant to the Employment Protection (Consolidation) Act 1978. National Power defended on the grounds that they were not employees. As Lord Irvine of Lairg LC noted at p 2044, the case was not advanced on the basis that when the applicants worked as guides, they did so under successive ad hoc contracts of employment. As in Nethermere, the case was put exclusively on the basis that they were employed under overriding or umbrella contracts. In those circumstances, in order to be contracts of employment, there needed to be mutual obligations in place, during the entire period said to be covered by the overriding contract, to offer and to accept work and for payment to be made for work done. That is the background to the statement of Lord Irvine at p 2047 on which PGMOL relied:
“If this appeal turned exclusively—and in my judgment it does not—on the true meaning and effect of the documentation of March 1989, then I would hold as a matter of construction that no obligation on the C.E.G.B. to provide casual work, nor on Mrs. Leese and Mrs. Carmichael to undertake it, was imposed. There would therefore be an absence of that irreducible minimum of mutual obligation necessary to create a contract of service …”
Clark v Oxfordshire Health Authority [1998] IRLR 125, another authority on which PGMOL relied, falls into the same category. The applicant, claiming for unfair dismissal, worked for the respondent’s “nurse bank”, with no fixed or regular hours, but she was offered work as and when a temporary vacancy occurred at one of the hospitals in the respondent’s area. The industrial tribunal held that the applicant worked on a casual basis and that there was no obligation on the health authority to offer her work or on her to accept it when it was offered. She was not an employee as the necessary mutuality of obligation was absent. The Employment Appeal Tribunal reversed the decision, holding that there was “a global contract of employment” between the applicant and the respondent. Following Nethermere, the Court of Appeal reversed the EAT’s decision and held that, without some mutuality of obligation, there could be no global contract of employment. Sir Christopher Slade, with whom Beldam and Schiemann LJJ agreed, made the point clear at para 41, where he said: “I would, for my part, accept that the mutual obligations required to found a global contract of employment need not necessarily and in every case consist of obligations to provide and perform work… . In my judgment, however, as I have already indicated, the authorities require us to hold that some mutuality of obligation is required to found a global contract of employment.”
None of these authorities establishes that, where there is a single engagement (such as officiating at a particular match), there must be mutual obligations in existence before the engagement commences, for example before the referee arrives at the ground on the day of the match. On the contrary, there are authorities that establish the contrary. In Clark v Oxfordshire Health Authority, immediately following the passage quoted above, Sir Christopher Slade said, “I can find no such mutuality subsisting during the periods when the applicant was not occupied in a ‘single engagement’”.
The point is made in clear and direct terms in a number of authorities that a contract of employment may exist covering only the period while the employee carries out work for which he or she is paid.
In McMeechan, the applicant worked for an employment agency on a series of temporary contracts under conditions of service that he was under no obligation to accept any assignment but that, if he did so, he would comply with instructions and with duties of fidelity and confidentiality. The agency became insolvent, and the applicant claimed payment of the sum due in respect of his last assignment, which had lasted four days, from the Secretary of State under legislative provisions then in force. The claim was resisted on the grounds that the applicant had not been an employee, which was a pre-condition to payment under the legislation. The Court of Appeal dismissed the Secretary of State’s appeal against the EAT’s decision that the applicant had been an employee.
The applicant was permitted to raise in the Court of Appeal an argument that he was an employee of the agency in respect of the single assignment in respect of which he made his claim for payment. Having considered in detail the terms applicable to the assignment, the Court of Appeal accepted this argument and held that the applicant had been employed for the final assignment alone. For present purposes, the important feature is that it mattered not that the applicant had been under no obligation to accept the assignment and was under no obligation to accept future assignments. At pp 555-556, Waite LJ (with whom McCowan and Potter LJJ agreed) contrasted, in relation to temporary or casual workers, general engagements and specific engagements and said:
“There is the general engagement, on the one hand, under which sporadic tasks are performed by the one party at the behest of the other and the specific engagement on the other hand which begins and ends with the performance of any one task. Each engagement is capable, according to its context, of giving rise to a contract of employment.”
Waite LJ noted that this had been acknowledged by the majority of the Court of Appeal in O’Kelly v Trusthouse Forte plc [1984] QB 90.
The position as regards single engagements and overriding contracts was summarised in Atholl House at para 74:
“It is now established that, while a single engagement can give rise to a contract of employment if work which has in fact been offered is in fact done for payment, an overarching or umbrella contract lacks the mutuality of obligation required to be a contract of employment if the putative employer is under no obligation to offer work …”
The single engagement was addressed by Lord Leggatt in Uber at para 91:
“Equally, it is well established and not disputed by Uber that the fact that an individual is entirely free to work or not, and owes no contractual obligation to the person for whom the work is performed when not working, does not preclude a finding that the individual is a worker, or indeed an employee, at the times when he or she is working: see eg McMeechan v Secretary of State for Employment [1997] ICR 549; Cornwall County Council v Prater [2006] ICR 731. As Elias J (President) said in James v Redcats(Brands) Ltd [2007] ICR 1006, para 84:
‘Many casual or seasonal workers, such as waiters or fruit pickers or casual building labourers, will periodically work for the same employer but often neither party has any obligations to the other in the gaps or intervals between engagements. There is no reason in logic or justice why the lack of worker status in the gaps should have any bearing on the status when working. There may be no overarching or umbrella contract, and therefore no employment status in the gaps, but that does not preclude such a status during the period of work.’
I agree, subject only to the qualification that, where an individual only works intermittently or on a casual basis for another person, that may, depending on the facts, tend to indicate a degree of independence, or lack of subordination, in the relationship while at work which is incompatible with worker status: see Windle v Secretary of State for Justice [2016] ICR 721, para 23.”
In the light of these authorities, it is clearly established that there may be sufficient mutuality of obligation to satisfy one of the essential requisites of a contract of employment, even if the obligations subsist only during the period while the putative employee is working for the putative employer. The example of casual workers given by Elias J in the passage from his judgment in James v Redcats (Brands) Ltd [2007] ICR 1006, para 84is enough to show that this is a commonplace occurrence. ….
Authorities on identifying the terms of an employment contract
The Supreme Court in PGMOL at [92] referred to “the established approach of taking account of all relevant terms of the contracts, in the light of all the surrounding circumstances which were known, or could reasonably be supposed to be known, to both parties (see Atholl House at paras 123-124)”.
In Carmichael v National Power Plc [1999] 1 WLR (House of Lords), Lord Irvine said at 2047:
In my judgment it would only be appropriate to determine the issue in these cases solely by reference to the documents in March 1989, if it appeared from their own terms and/or from what the parties said or did then, or subsequently, that they intended them to constitute an exclusive memorial of their relationship. The industrial tribunal must be taken to have decided that they were not so intended but constituted one, albeit important, relevant source of material from which they were entitled to infer the parties' true intention, along with the other objective inferences which could reasonably be drawn from what the parties said and did in March 1989, and subsequently.
Atholl House
The question in HMRC v Atholl House [2022] STC 837 was whether the taxpayer’s contractual relationship with the party engaging her was one of employment; the Tribunal had held, relying on Autoclenz Ltd v Belcher [2011] UKSC 41, that certain clauses in the relevant contract did not reflect the actual terms agreed between the parties, in that the engaging party did not have the right of first call on the taxpayer’s services, nor was the taxpayer required to seek that party’s consent to other engagements. The Upper Tribunal found that the Tribunal had erred in its application of Autoclenz. It held that the Tribunal had departed materially from normal principles of contractual interpretation without a sufficiently secure basis in its examination of the written contracts and the surrounding circumstances, including the post-contractual circumstances, to make such a departure permissible. The Court of Appeal found that the Upper Tribunal had been right to reject the Tribunal’s decision on Autoclenz for the reasons it gave.
The Court of Appeal in Atholl House said this at [123], returning to “first principles”:
[123] …. The relationship of employment is created by the employer and employee through the contract made by them. The question for the court or tribunal is whether, judged objectively, the parties intended when reaching their agreement to create a relationship of employment. That intention is to be judged by the contract and the circumstances in which it was made. To be relevant to that issue any circumstance must be one which is known, or could reasonably be supposed to be known, to both parties. Those circumstances are the same as those comprising the factual matrix admissible for the interpretation of contracts: the ‘facts or circumstances which existed at the time that the contract was made, and which were known or reasonably available to both parties’ (Arnold v Britton [2015] UKSC 36, [2016] 1 All ER 1, [2015] AC 1619 (at [21])).
[124] If the person providing the services is known to carry on a business, profession or vocation on their own account as a self-employed person, it would in my judgment be myopic to ignore it, when considering whether or not the parties intended to create a relationship of employment. In many of the cases, it has been taken into account for that purpose. The weight to be attached to it is a matter for the decision-making court or tribunal. …
In the section of its judgment dealing with the application of the approach approved in Autoclenz, the Court of Appeal first described what that approach was – and, in doing so, referred to Consistent Group Ltd v Kalwak (2007) UKEAT/0535/06, [2007] IRLR 560at [57-59]; it then looked at the decision of the Supreme Court in Uber BV v Aslam [2021] UKSC 5; given that the question in Atholl House was one of statutory interpretation as opposed to contractual interpretation, the Court of Appeal found that justification for the application of the approach approved in Autoclenz was “entirely absent”.
The Court of Appeal then said that “on this ground” – the Supreme Court’s decision in Uber and its implications – which had not been available for the Upper Tribunal (in Atholl House) to consider – the Upper Tribunal’s rejection of the Tribunal’s reasoning and conclusion on the application of Autoclenz was correct. But the Court of Appeal then went on to say (at [158]) that, “in any event”, the Upper Tribunal was right so to do i.e. it was right so to do, even absent the Supreme Court’s decision in Uber. This was explained in the following paragraph, [159], where the Court of Appeal explained why the Upper Tribunal’s view was an ‘orthodox’ (my word) application of Autoclenz – and in so doing, the Court of Appeal referred both to Autoclenz itself (via references to Lord Clarke, the author of the Autoclenz judgment) and to Kalwak, which was “quoted with approval by Lord Clarke”.
Arnold v Britton
Arnold v Britton [2015] UKSC 36was a landlord versus tenant case about the interpretation of service charge contribution provisions in 99-year leases of chalets in a caravan park. In its judgement, the Supreme Court said this:
When interpreting a written contract, the court is concerned to identify the intention of the parties by reference to “what a reasonable person having all the background knowledge which would have been available to the parties would have understood them to be using the language in the contract to mean”, to quote Lord Hoffmann in Chartbrook Ltd v Persimmon Homes Ltd [2009] UKHL 38, [2009] 1 AC 1101, para 14. And it does so by focussing on the meaning of the relevant words, in this case clause 3(2) of each of the 25 leases, in their documentary, factual and commercial context. That meaning has to be assessed in the light of (i) the natural and ordinary meaning of the clause, (ii) any other relevant provisions of the lease, (iii) the overall purpose of the clause and the lease, (iv) the facts and circumstances known or assumed by the parties at the time that the document was executed, and (v) commercial common sense, but (vi) disregarding subjective evidence of any party’s intentions.
Seven factors were then emphasised by the Supreme Court in that case:
“the reliance placed in some cases on commercial common sense and surrounding circumstances … should not be invoked to undervalue the importance of the language of the provision which is to be construed.”
“when it comes to considering the centrally relevant words to be interpreted, I accept that the less clear they are, or, to put it another way, the worse their drafting, the more ready the court can properly be to depart from their natural meaning.”
“commercial common sense is not to be invoked retrospectively.”
“while commercial common sense is a very important factor to take into account when interpreting a contract, a court should be very slow to reject the natural meaning of a provision as correct simply because it appears to be a very imprudent term for one of the parties to have agreed
one can only take into account facts or circumstances which existed at the time that the contract was made, and which were known or reasonably available to both parties
in some cases, an event subsequently occurs which was plainly not intended or contemplated by the parties, judging from the language of their contract. In such a case, if it is clear what the parties would have intended, the court will give effect to that intention
the seventh factor was specific to service charge clauses in leases.
Relatively recent authorities on umbrella companies and deductibility of travel expenses
The summaries which follow rely heavily on the headnotes in Simons Tax Cases, for which we are grateful. It is to be noted that the decisions described here were all issued prior to the Supreme Court’s decision in PGMOL being issued (apart from the Court of Appeal’s decision in Mainpay).
Mainpay v HMRC
Facts and Tribunal’s decision
Mainpay was an employment business or umbrella company engaging temporary workers who supplied services to end users or clients. Mainpay did not enter into agreements directly with the end client, instead, each client entered into an agreement with an employment agency and the employment agency in turn entered into an agreement with Mainpay. The way the arrangement was operated was that a worker would agree an assignment with an agency, the agency then provided details of the assignment to Mainpay.
Most workers only undertook one assignment in a year and the average length of an assignment was between 8–13 weeks. Under its contracts with the workers, Mainpay was required to pay the workers at a rate to be agreed in relation to a particular assignment subject to statutory deductions in respect of tax and national insurance contributions. Workers were able to claim subsistence expenses, which Mainpay treated as deductible. HMRC considered that those expenses were not so deductible and issued determinations.
The Tribunal held ([2023] SFTD 655) that each assignment, governed by a separate contract of service, was a separate employment. There was no suggestion in s4 that a single employment might encompass more than one contract of service. The contract between Mainpay and its workers was correctly analysed as a framework agreement which provided the basis on which consecutive contracts of service arose each time an assignment was entered into. There was a separate contract in existence throughout the entire period but that contract was different to and separate from the contracts of employment which came into existence for each individual assignment. The ‘employment’ did not arise under the framework agreement but instead came into existence as a result of each separate contract of service. The result of that was that each workplace at which a worker carried out an assignment could not be a temporary workplace: the period of the employment was the period of the assignment, and so the individual would attend the workplace for all or almost all of that period.
The Tribunal also found that the workplaces were permanent workplaces.
Upper Tribunal’s decision
Mainpay appealed on the grounds that the Tribunal made the errors of law including:
in concluding that Mainpay’s 2013 contract with workers was not an overarching contract of employment;
in concluding that successive assignments under the same overarching contract represented single employments.
In a decision released on 16 August 2024 ([2024] STC 1587) , the Upper Tribunal dismissed Mainpay’s appeal, finding that
the Tribunal had properly directed itself as to the law relating to mutuality of obligation. The Tribunal had found that there was a sufficient obligation on Mainpay in the gaps between assignments, but not on the workers. In the instant case, particularly given the absence of any contractual obligation on Mainpay to pay a worker a minimum fee, Mainpay’s 2013 contract had not created the necessary mutuality of obligation on the part of a worker. The Tribunal had therefore been fully entitled to reach the decision which it did on the issue
the Tribunal was entitled to reach the conclusion, for the reasons which it gave, that each contract was properly construed as a framework agreement which provided the basis on which consecutive contracts of service for individual assignments could arise. A dividing line which took into account the presence or absence of mutuality in the gaps between assignments when considering an umbrella contract was entirely logical; it was the status of the contract during those gaps which determined whether there was a single overarching contract of employment.
Court of Appeal’s decision
The grounds of appeal (to the Court of Appeal) included whether the Tribunal and the Upper Tribunal erred in law in applying the wrong test to decide whether two discontinuous periods of work (which ‘are accepted to amount to employment’) were part of the same employment or were separate employments.
In a decision issued in October 2025 ([2025] STC 1744), the appeal was dismissed: The Court of Appeal said at [102]:
I readily accept that the relationship between the parties to this contract is, at times, to be classified as a contract of employment, and at other times, not. It does not follow from that intermittent classification as a contract of employment, coupled with the fact that the relationship between the parties is governed by the same contract throughout, that the contract is to be or can be classified as a continuing contract of employment throughout its life. It cannot be classified in that way, because in the gaps between assignments, there is no contract of employment at all. The correct analysis is that there is intermittent employment under a contract of employment when a worker is on an assignment, followed by periods when there is no contract of employment, and, therefore, no employment at all, in the gaps between assignments. That analysis is consistent with what the parties have agreed, save that they cannot agree that there is a ‘continuing’ or overarching contract of employment when the correct legal analysis is that there is no contract of employment at all during those gaps between assignments. The intermittent periods of employment are not, for the purposes of the relevant statutory provisions, one employment. They are successive employments. The [Tribunals below] were right so to hold.
Exchequer Solutions v HMRC
The taxpayer was an umbrella company servicing the construction sector. It contracted with construction sector employment agencies (who matched individuals to specific construction work assignments with end-user clients) agreeing to take on the role of employer of the individuals undertaking the assignments; a role neither the end-user client nor employment agency wished to take on. It was common ground that the taxpayer was the relevant individual’s employer during the period of the construction assignment. The question was whether there was an overarching contract of employment which also covered the gaps in between the assignments. That issue affected the taxpayer’s ability to deduct travel reimbursement expense payments. In a decision issued in January 2024, the Upper Tribunal held ([2024] STC 271) that the Tribunal had been entitled to find that there was no overarching contract of employment. It had been entitled to find that there was no obligation (and not even a contingent obligation) to provide work, and no obligation (and again not even a contingent obligation) to accept it. The Tribunal had been correct to find that the taxpayer’s various obligations under the contract in relation to statutory sick, maternity and paternity pay and in relation to notice did not constitute sufficient mutuality of obligation. The obligation the parties had agreed, which was to pay no more than what the statute required, could have nothing to say on the issue of whether there was an overarching contract.
Findings about MyPay’s dispensation
Although it was common ground that the dispensation given to MyPay in 2008 was a valid dispensation under s65, neither party was able (due to the passage of time) to produce evidence of the
statement of the cases and the circumstances in which—
payments of a particular character are made to or for any employees, or
benefits or facilities of a particular kind are provided for any employees ….
which, under s65(1) (as just quoted), MyPay supplied to HMRC as the first step leading to the giving of the dispensation.
However, we find that the dispensation itself recorded the “payments, benefits or facilities mentioned in the statement supplied by” MyPay (the quoted words are from s65(4)): we make this finding because the opening words of the dispensation are
This Dispensation applies to the expenses payments, cash and non-cash vouchers, use of credit tokens benefits and facilities which are set out below
It then referred, more than once, to “these expenses payments and benefits”; and in the third paragraph, it emphasised:
The Dispensation applies only to the expenses payments and benefits, set out below, in the circumstances there set out.
The point was made again in the fourth paragraph (the final substantive paragraph on the first page, before the signature of the HMRC inspector):
Payments and benefits that are in any way different, or are provided in circumstances that differ, from those set out below will not be covered by this Dispensation ….
On the next page – which was clearly the matters referred to on the first page as being “set out below” – the dispensation had two headings: “Specified individuals” and “Nature of payments or things provided”. Item 1 under the latter was travelling expenses necessarily incurred whilst on company business, both in the United Kingdom and abroad, which do no more than reimburse the employee for the cost of parking, congestion charges, road and bridge tolls and fares for public transport by air, road, rail or sea whilst away from the normal place of work..., but excluding any costs relating to:- ... b. any element of home to office travel.”
Discussion
In what follows, being our reasoning on the issues in this case, we have incorporated (without attribution) parties’ submissions to the extent we agree with them and, to the extent we have not accepted a material submission of a party, we endeavour to explain why (although not always by express reference to “the submission of party X”). This means that, whilst we have not recounted each party’s submissions, in turn, in the text of this decision, we have considered them with care and explain, in what follows, why any material submission has not been accepted.
The primary issue: was each assignment a separate employment; or was there one continuous employment?
The case law establishes that in a case like this – where it was common ground that, when workers were engaged on an assignment, there was a contract of employment between MyPay and the worker – the key determinant, as regards the primary issue, is whether, when workers were not engaged on an assignment, there was the required degree of “mutual obligation” as between MyPay and workers, such that there was one continuous contract of employment (rather than separate, intermittent contracts of employment, each time a worker started a new assignment).
In our view, the Statements do not provide evidence of the required degree of “mutual obligation”, during times when the worker was not engaged on an assignment: this follows from our findings and observations, above, about what the Statements had to say about the core issues of what work was required of the worker, when, where, and for what pay – we have found that the Statements provided few if any specific details about these core issues, and the reason the Statements were so non-specific and non-directive, was that these core matters were settled and agreed on an assignment-by-assignment basis. To put it in simple and graphic terms: on our reading of the Statements, if, hypothetically, a worker did not arrange an assignment with a recruitment agency, and then
the worker had demanded of MyPay that it give them work and pay them wages, the worker would have been unable to ground such a demand in what was said in the Statements: no wage at all was specified in the Statements, and the amount of the worker’s wage was “to be agreed”; furthermore, in our view, the deliberate use of the word “endeavour” in the provision in the “Place of work” clause about MyPay “endeavouring” to provide the worker with work, clearly indicates that any such demand by the worker would not have been supported by what was said in the Statements; or, contrariwise,
MyPay had demanded that the worker perform such-and-such work (per their “appointment” as (in the example Statements) “medical worker”) outside the scope of any assignment arranged by the worker, MyPay would have been unable to ground such a demand in what was said in the Statements: in particular, MyPay could not, in our view, rely on the “Appointment” clause provision that the worker “from time to time” undertake “additional and/or alternative duties” “reasonably required” by MyPay to assist in the efficient running of MyPay’s business, since
in pre-2014 Statements, “additional” or “alternative” duties were by reference to an attached job description; the purpose of the clause was therefore to accommodate multiple assignments (with differing duties) coming under the same Statement; it would not, in our view, and based on our factual findings, have been “reasonable” for MyPay to have required a worker to undertake duties outside any assignment arranged by the worker themselves; and
in post-2014 Statements, “additional” or “alternative” duties were by reference to the worker’s “normal duties” – these were not specified in such Statements and, based on our findings, this was because “normal duties” were established on an assignment-by-assignment basis; the purpose of the clause was, as in pre-2014 Statements, to accommodate multiple assignments (with differing duties) coming under the same Statement; it would not, in our view, and based on our factual findings, have been “reasonable” for MyPay to have required a worker to undertake duties outside any assignment arranged by the worker themselves.
This means, in our view, and in the language of the case law, that when the worker was not engaged on an assignment, there was no sufficient mutuality of obligation: MyPay had no obligation to provide work (and pay), and the worker was under no obligation to perform any work.
We acknowledge the case law, alluded to in PGMOL at [48], to the effect that the mutual obligations required to found a global contract of employment need not necessarily and in every case consist of obligations to provide and perform work (the example given by Sir Christopher Slade in Clark v Oxfordshire Health Authority, the case referred to in that part of the PGMOL judgement, was an obligation by one party to accept and do work if offered and an obligation on the other party to pay a retainer during such periods as work was not offered). However, it is clear that there has to be some mutuality of obligation to found a global contract of employment and, on our findings, there was none, in periods when no assignment was in place.
We now set out our thinking on other, specific arguments raised in submissions:
We were not persuaded that the “Hours of work” clause in the Statements, in which MyPay guaranteed to offer a minimum of 336 hours of work each year, created the required “mutual obligations” in periods when the worker was not engaged on an assignment: the use of the word “offer” was a clear and deliberate indication that, in the event that MyPay did “offer” work at such a time, the worker was under no obligation to “accept” it. When the Court of Appeal in Atholl House at [74] said that an overarching or umbrella contract lacks the mutuality of obligation required to be a contract of employment if the putative employer is under no obligation to offer work, it was not saying, that an obligation to offer work did, of itself, create such mutuality of obligation: this is clear from the context:
at [73], the Court of Appeal considered those employment contracts that stipulate that the employee is to work a number of hours and days per week for the employer and the employer is to pay remuneration – which it considered was the case with “most” employment contracts – and observed that, under such contracts, the employer is not required to provide work for the employee in addition to payment of the agreed remuneration;
at [74], the Court of Appeal considered a different kind of contract – those under which the putative employee is to be paid only for work which he undertakes. Here, the Court of Appeal asked,
In order to satisfy the requirement for mutuality of obligation, do there need to be obligations not only on the part of the employee to undertake some work but also on the part of the employer to offer some work or pay remuneration in place of offering work?
It was in answer to this question that the Court of Appeal stated
It is now established that, while a single engagement can give rise to a contract of employment if work which has in fact been offered is in fact done for payment, an overarching or umbrella contract lacks the mutuality of obligation required to be a contract of employment if the putative employer is under no obligation to offer work.
In other words, in a contract of the kind the Court of Appeal was considering, where the putative employee is paid only for work which he undertakes, an obligation on the (putative) employer to offer work is a necessary, but not sufficient, condition, for mutuality of obligation (as mutuality of obligation would come into being only if the worker was required to accept the work offered – which was not the case here).
We did not assign much significance to the point that the Statements presented themselves as the terms and conditions of (an) employment (rather than of multiple, intermittent employments) and, indeed, did not on their face refer to “assignments” at all. In our view, the case law directs us to look at the specific issue of whether there were sufficient “mutual obligations” on the part of MyPay and the workers, in those periods of time where the workers were not engaged on an assignment; this has meant that our focus has been on the “wage-work bargain” in those periods. Nor do we assign much significance, in our analysis of that issue, to the “What we expect from you” clause in the Statements saying that the worker had to comply with all reasonable and lawful instructions and requests of their account manager or a director, devote their whole time, attention and abilities to their duties during their working hours, and inform a director if they undertook any work outside their contracted hours of work: it seems to us the references to “working hours” and “contracted hours of work” were understood by both parties to refer to work undertaken on assignments; and “reasonable and lawful instructions and requests” is properly to be read in the context of the document as a whole which, we have found, is designed to accommodate an “assignment-by-assignment” pattern of work. We note, in a similar vein, the wording in the “Lay offs and short term working” clause of the Statements about MyPay reserving the right not to provide the worker work, or reduce the worker’s hours of work; in our view, this wording, in a clause dealing with a peripheral matter to the core issues at stake in the “wage-work bargain”, does not disturb our analysis that such bargain did not exist in the periods when the worker was not engaged in an assignment.
The fact that many workers went from one assignment “immediately” (in the sense we explained above) to the next does not affect the analysis, as the case law directs us to examine the position when no assignment is in place (however short that period may be).
The foregoing analysis has required us to construe wording in the Statements and, in so doing, we have followed the guidance in Arnold v Britton. We have found the Statements to be non-specific and non-directive on most if not all of the core issues of interest to MyPay and workers. We have also made findings about MyPay’s business model, and the fact that it would have been familiar both to MyPay and to the workers. We find no difficulty, on the basis of those findings, in applying the six factors in whose light the meaning of a contract is to be assessed, set out in Arnold v Britton at [15], and thereby concluding that the Statements were framework arrangements under which contracts of employment were entered into on an assignment-by-assignment basis. In particular, doing so has not required us to “undervalue the importance of the language” of the Statements, or to depart from the “natural meaning” of words in the Statements (the quotations are from the seven factors emphasised on the facts of Arnold v Britton itself).
For completeness, we record our agreement with MyPay’s submission that, as set out in Atholl House at [156], the “approach approved in Autoclenz” is not appropriate in a contractual interpretation case like this one – and this is not gainsayed by what was said in Atholl House at [159] (where the Court of Appeal was looking at things on the hypothetical basis that the Autoclenz approach was appropriate). Accordingly, we have not applied the Autoclenz approach in this case. We also agree with MyPay that the Autoclenz approach would appear to incorporate what was said in Kalwak at [57-59].
It follows that the appeal fails on the principal issue: each assignment undertaken by a worker was a separate contract of employment; no deduction is allowed for MyPay’s travel expense reimbursement payments under s338, as they were expenses of ordinary commuting; this is because the location of each assignment was a “permanent workplace” per s339 as, in relation to each employment (i.e. each assignment), it was the place the worker regularly attended in the performance of the duties of that employment, and it was not a “temporary workplace” per s339(3).
The secondary issue: were the travel expenses covered by MyPay’s dispensation?
The effect of a valid dispensation (as, it is common ground, MyPay’s dispensation was) is that, under s65(5), nothing in the “listed provisions” applies to the payments, or the provision of the benefits or facilities, covered by the dispensation or otherwise has the effect of imposing any additional liability to tax in respect of them.
It is also common ground that the “listed provisions” include those that would deny deductibility of the travel expenses reimbursement payments at issue in this appeal.
The key issue is therefore whether those travel expenses reimbursement payments are covered by the dispensation.
We have found that the dispensation itself sets out what payments are covered by it. These include travel expenses necessarily incurred whilst on company business and whilst away from the normal place of work, but excluding costs relating to any element of home to office travel. MyPay appeared to be arguing that it was problematic for the dispensation to exclude any payments which, at the time MyPay supplied its s65(1) statement of cases and circumstances, MyPay was, in practice, paying. If this was MyPay’s argument, we do not accept it: both s65(3) and (4) speak of tax payable under the listed provisions “by reference to payments … mentioned in the statement supplied by” MyPay; it seems to us, on that language, that HMRC could, validly, include some payments within the dispensation, but not others.
The question is then whether the travel expense reimbursement payments at issue in this appeal, are included within the wording we have italicised in the immediately preceding paragraph. Mr Hollins expressed the view, in his witness statement, that they were so included, and that “home to office travel” could only apply to what he called “ordinary office-based work” and so, only to MyPay’s administrative staff (as opposed to MyPay employees undertaking assignments). We do not agree. It seems to us that travel expenses of workers travelling to their place of work on assignment are excluded from the dispensation, both because the expenses were not incurred “whilst away from the normal place of work”, and because they comprise “home to office travel”. This seems to us plain from the language deployed in the dispensation.
It follows that the appeal also fails on the secondary issue: the travel expenses in question are not covered by MyPay’s 2008 dispensation.
Conclusion
The appeals are dismissed for the reasons given above.
As noted above, MyPay requested in the course of the hearing that, if we were to dismiss the appeals, we give HMRC the opportunity to reduce the determinations and decision appealed if, on the basis of further evidence provided by MyPay since they were made in 2019 and 2020, HMRC saw fit so to do.We are not persuaded that we have any power to do what MyPay has requested; rather, our powers are restricted to either reducing or increasing the amount in the determinations and decision, if we had decided that MyPay was either overcharged or undercharged; and (for the avoidance of doubt) we have not so decided.
Right to apply for permission to appeal
This document contains full findings of fact and reasons for the decision. Any party dissatisfied with this decision has a right to apply for permission to appeal against it pursuant to Rule 39 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009. The application must be received by this Tribunal not later than 56 days after this decision is sent to that party. The parties are referred to “Guidance to accompany a Decision from the First-tier Tribunal (Tax Chamber)” which accompanies and forms part of this decision notice.
Release date:
02 June 2026
APPENDIX: TEXT OF SECTIONS 338, 339 AND 65
Section 338
Travel for necessary attendance
A deduction from earnings is allowed for travel expenses if—
the employee is obliged to incur and pay them as holder of the employment, and
the expenses are attributable to the employee’s necessary attendance at any place in the performance of the duties of the employment.
Subsection (1) does not apply to the expenses of ordinary commuting or travel between any two places that is for practical purposes substantially ordinary commuting.
In this section “ordinary commuting” means travel between—
the employee’s home and a permanent workplace, or
a place that is not a workplace and a permanent workplace.
Subsection (1) does not apply to the expenses of private travel or travel between any two places that is for practical purposes substantially private travel.
In subsection (4) “private travel” means travel between—
the employee’s home and a place that is not a workplace, or
two places neither of which is a workplace.
This section needs to be read with section 359 (disallowance of travel expenses: mileage allowances and reliefs).
Section 339
Meaning of “workplace” and “permanent workplace”
In this Part “workplace”, in relation to an employment, means a place at which the employee’s attendance is necessary in the performance of the duties of the employment.
In this Part “permanent workplace”, in relation to an employment, means a place which—
the employee regularly attends in the performance of the duties of the employment, and
is not a temporary workplace.
This is subject to subsections (4) and (8).
In subsection (2) “temporary workplace”, in relation to an employment, means a place which the employee attends in the performance of the duties of the employment—
for the purpose of performing a task of limited duration, or
for some other temporary purpose.
This is subject to subsections (4) and (5).
A place which the employee regularly attends in the performance of the duties of the employment is treated as a permanent workplace and not a temporary workplace if—
it forms the base from which those duties are performed, or
the tasks to be carried out in the performance of those duties are allocated there.
A place is not regarded as a temporary workplace if the employee’s attendance is—
in the course of a period of continuous work at that place—
lasting more than 24 months, or
comprising all or almost all of the period for which the employee is likely to hold the employment, or
at a time when it is reasonable to assume that it will be in the course of such a period.
For the purposes of subsection (5), a period is a period of continuous work at a place if over the period the duties of the employment are performed to a significant extent at the place.
An actual or contemplated modification of the place at which duties are performed is to be disregarded for the purposes of subsections (5) and (6) if it does not, or would not, have any substantial effect on the employee’s journey, or expenses of travelling, to and from the place where they are performed.
An employee is treated as having a permanent workplace consisting of an area if—
the duties of the employment are defined by reference to an area (whether or not they also require attendance at places outside it),
in the performance of those duties the employee attends different places within the area,
none of the places the employee attends in the performance of those duties is a permanent workplace, and
the area would be a permanent workplace if subsections (2), (3), (5), (6) and (7) referred to the area where they refer to a place.
Section 65
Dispensations relating to benefits within provisions not applicable to lower-paid employment
This section applies for the purposes of the listed provisions where a person (“P”) supplies an officer of Revenue and Customs with a statement of the cases and circumstances in which—
payments of a particular character are made to or for any employees, or
benefits or facilities of a particular kind are provided for any employees,
whether they are employees of P or some other person.
The listed provisions” are the provisions listed in section 216(4) (provisions of the benefits code which do not apply to lower-paid employments).
If an officer of Revenue and Customs is satisfied that no additional tax is payable by virtue of the listed provisions by reference to the payments, benefits or facilities mentioned in the statement, the officer must give P a dispensation under this section.
A “dispensation” is a notice stating that an officer of Revenue and Customs agrees that no additional tax is payable by virtue of the listed provisions by reference to the payments, benefits or facilities mentioned in the statement supplied by P.
If a dispensation is given under this section, nothing in the listed provisions applies to the payments, or the provision of the benefits or facilities, covered by the dispensation or otherwise has the effect of imposing any additional liability to tax in respect of them.
If in their opinion there is reason to do so, an officer of Revenue and Customs may revoke a dispensation by giving a further notice to P.
That notice may revoke the dispensation from—
the date when the dispensation was given, or
a later date specified in the notice.
If the notice revokes the dispensation from the date when the dispensation was given—
any liability to tax that would have arisen if the dispensation had never been given is to be treated as having arisen, and
P and the employees in question must make all the returns which they would have had to make if the dispensation had never been given.
If the notice revokes the dispensation from a later date—
any liability to tax that would have arisen if the dispensation had ceased to have effect on that date is to be treated as having arisen, and
P and the employees in question must make all the returns which they would have had to make if the dispensation had ceased to have effect on that date.