Self employed or employed group leaders?
The tax Tribunal recently heard a case involving Weight Watchers (UK) Ltd (WWUK). The appeal concerned the employment status of the group leaders who had been engaged on what was thought to be a self-employed basis, to organise and lead weekly meetings for members who wished to lose weight.
HMRC argued that the group leaders’ relationship with WWUK was, for tax purposes, more that of employee and employer.
HMRC issued determinations both to Weight Watchers (UK) Ltd and to a number of the group leaders personally for the unpaid class 1 NICs due as if the group leaders were employees, for periods dating back to 2001/02. The company and the group leaders appealed against the determinations.
Although there was no written contract of employment between the group leaders and the company, there were extensive instructions that governed how the leaders should behave at the meetings, what goods they were allowed to sell, and even the topics for discussion. Each group leader also reported to an area service manager.
The tax tribunal found that there was a considerable degree of control by the company over the group leaders, and those leaders had to provide a personal service. Although each group leader could find a substitute to run a meeting on their behalf, that substitute had to be another fully trained group leader and the payment for that substitute was made directly by the company. The tax tribunal concluded that the group leaders were employees of WWUK, so both the company and the group leaders (of which there are over 1,000) became liable for unpaid NICs.