New HMRC guidance on self employed chefs

This post first appeared on reliefchef.org, in April 2015

The dawn of the new tax year brought new powers to HM Revenue & Customs (HMRC). This concerns the self employed status and, the use of Personal Service Companies (PSC) & Limited companies (Ltd). HMRC are specifically targeting the Catering; Security; Driving and Construction sectors for those that are declaring ‘False Self-Employment’.

The measurement which will define whether a chef is self employed (sole trader, PSC or Ltd etc), is governed by the level of supervision & responsibility that individual has in the workplace.

Here is the HMRC example given, to demonstrate the differences of what does & does not meet the new legislation:

Professional Chef.
Imran is a qualified chef who has a number of years experience working in restaurants. He obtains his work via an employment business which finds him jobs with clients. A High Street restaurant asks the employment business to supply them with a qualified chef with experience of working in a professional restaurant to provide one month’s cover for an absent chef. The employment business contact Imran about the position and arrange for him to visit the restaurant, to be interviewed by the proprietor, (who is also the Head Chef).

Scenario 1.
Imran is offered the engagement and he accepts.
Imran attends the restaurant on his first day and meets the proprietor and is presented with a copy of the restaurant’s current menu, containing specialist dishes the proprietor has created herself.

Imran is told he must be able to prepare and cook those dishes in the same way and to the same standard as the restaurants other chefs and throughout his engagement he must comply with the mandatory food hygiene standards.

Imran first task is to watch the proprietor demonstrate how she makes her specialist dishes, copying her as she goes along, to ensure he learns how to prepare the dishes as required. Throughout Imran’s engagement the proprietor dictates how Imran will undertake his various duties. This includes telling Imran what dishes he must prepare, the way they must be prepared and what specific ingredients he must use. Over the next month the proprietor watches over Imran and the other chefs during their work, to ensure they are preparing and cooking the dishes correctly and on time, stepping in to provide guidance and assistance where necessary. The proprietor also provides Imran with other jobs to do in addition to preparing meals.

This includes helping with the checking and ordering of new stock from the suppliers and unloading, recording and storing those supplies upon delivery. Imran completes his work for this client at the end of the month.

In this scenario Imran has been subject to supervision direction and control as to the manner in which he provides his services. The proprietor has told Imran what specific work he must do and how that work must be done, directing Imran in his work throughout. The proprietor also supervised operations in the kitchen to make sure Paul and the other chefs were doing their work in the way the proprietor required (ie:- preparing dishes in a specific way).

Imran has no control over the manner in which he provided his services, as this was all dictated by the proprietor.
The agency legislation applies to this scenario, provided the other conditions of the legislation are also met.
We can see from this particular example that Imran was required to comply with food hygiene standards. HMRC do not consider that factor alone demonstrates the worker being subject to (or to a right of) supervision, direction or control as to the manner in which they provide their services for the purpose of the agency legislation, as this is a mandatory requirement for all persons working in food preparation (regardless of their employment status).

Scenario 2.
Imran visits the restaurant and meets the proprietor. They discuss Imran’s extensive experience as per his CV. Imran gives a short demonstration of his skills and satisfied that Imran is the correct man for the job the proprietor offers the engagement to Imran and he accepts.

The proprietor tells Imran that she normally runs the restaurant herself, cooking the meals with her two catering assistants, but she is having a break for the next month and she wants Imran to step in and cover for her, using the catering assistants as Imran chooses. The proprietor presents Imran with a copy of the restaurant’s current menu and tells Imran she is happy for Imran to prepare the meals in his own way, using whatever ingredients he chooses and if Imran wants to introduce a couple of his own dishes then that is fine, provided the proprietor can sample them beforehand. Imran decides to add two of his signature dishes to the menu. He cooks each dish for the proprietor, who approves them and then leaves Imran alone to work in the kitchen without any interference whatsoever and goes on holiday.

Imran has complete control of the kitchen and the catering assistants working alongside him. Imran completes his one month engagement for this client.

In this scenario, whilst Imran is preparing dishes that are largely dictated by the restaurant’s menu, he is free to prepare those dishes and his own creations as he sees
fit, without interference from anyone.

Whilst the proprietor wanted to taste Imran’s signature dishes before allowing him to make them, this is not an example of the proprietor exercising any supervision, direction or control. The proprietor was simply ensuring the food was to the required standard in order to protect the restaurants reputation. Imran is not supervised, directed or controlled by anyone during the time he provides his services, nor does anyone have a right to supervise, direct or control how Imran provides his services.

The Agency legislation will not apply to this scenario.

A full version of this document is available to download in PDF: Here on reliefchef.org

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