Pizza delivery drivers had been employed under a contract of service for income tax purposes

Mark Tottenham BL, 10 January 2020 (© Decisis)

January 15, 2020

Karshan (Midlands) Ltd v Revenue Commissioners [2019] IEHC 894 


High Court dismisses appeal by way of a case stated from a determination of the Tax Appeals Commissioners, and affirms determination that pizza delivery drivers had been employed under a contract of service for income tax purposes, notwithstanding contrary terms in their contract with the company, on the grounds that the Commissioner had not erred in her interpretation of the concepts of: (a) mutuality of obligations; (b) substitution of another driver; (c) integration; and (d) the terms of the written contract.

Tax - appeal by way of case stated - s 949AQ of the Taxes Consolidation Act 1997 - determination of Tax Appeal Commissioner - whether pizza delivery drivers were working under contracts of services - whether taxable pursuant to schedule E of the TCA - written agreement between company and driver - terms of agreement - acknowledgement by drivers that they were independent contractors and that company had no liability for tax on their earnings - mutuality of obligations - substitution - integration - whether commissioner gave proper weight to actual terms of contract - burden of proof on company - function of court on appeal - hybrid contract - whether drivers entitled in reality to sub-contract the performance of their duties - integration.


Quotation from judgment (courtesy of the Courts Service of Ireland):

'In truth, there is no comprehensive statutory or common law definition of a “contract for services” or “contract of service” even though those terms are regularly used. Those adjudicating at first instance, whether a commissioner or court, may be tempted to adopt a box-ticking exercise when considering if an appellant or claimant is an employee or not. In fact, classification needs a careful and flexible understanding of relationships.


This scenario is different from the engagement of a self-employed tradesman or solicitor. Drivers, unlike those service providers, work rosters and shifts. A self-employed plumber may agree to service a boiler but the plumber has inherently tremendous latitude in that task unlike the drivers who had ongoing obligations.


The Commissioner determined that “[t]he absence of an ability to genuinely subcontract is a factor which indicates that the drivers worked under contracts of service as opposed to contracts for services.” The Commissioner did not err in applying the fact that drivers did not hire assistants; rather one driver was replaced with another driver from the appellant’s pool of drivers. The substitute was paid by the appellant. A substitute was not a sub-contractor of the driver. Moreover, the driver and substitute left it to the appellant to prepare invoices for them respectively.


The reasoning in the determination is not flawed; the Commissioner looked at many factors, including the requirement for drivers to:- (i) Wear uniforms and place logos on their cars; (ii) Reassure customers that they were dealing with personnel of the appellant; (iii) Maintain a coherent operation under the care of the appellant; (iv) Take telephone orders from the appellant and not the customers of the appellant.'


Note: This is intended to be a fair and accurate report of a decision made public by a court of law. Any errors should be notified to the editor and will be dealt with accordingly.


Key Cases Cited:

Airfix Footwear Limited v Cope [1978] ICR 1210

Autoclenz Ltd v Belcher [2011] UKSC 41, [2011] 4 All ER 745

Barry v Minister for Agriculture [2011] IEHC 43 (unreported, High Court, Hedigan J, 9th February, 2011)

Barry v Minister for Agriculture [2015] IESC 63 (unreported, Supreme Court, 16th July, 2015)

Brent London Borough Council v Fuller [2011] EWCA Civ 267, [2011] ICR 806

Castleisland Cattle Breeding v Minister for Social Welfare [2004] IESC 40, [2004] 4 I.R. 150

ESB v Minister for Social Community and Family Affairs & Ors [2006] IEHC 59, [2006] ITR 63

Henry Denny & Sons (Ireland) Ltd v Minister for Social Welfare [1997] IESC 9, [1998] IR 34

Mac Cárthaigh v Cablelink Ltd [2003] 4 IR 510

Mara (Inspector of Taxes) v Hummingbird Ltd [1982] ILRM 421 at p 426

McKayed v Forbidden City Limited [2016] IEHC 722 (unreported, High Court, 16th November, 2016)

Minister for Agriculture v Barry [2008] IEHC 216, [2009] IR 215

Nethermere (St. Neots) Limited v Gardiner [1984] ICR 612

Pimlico Plumbers Ltd v Smith [2018] UKSC 29, [2018] 4 All ER 641

Stevenson Jordan and Harrison Ltd v MacDonald and Evans [1952] 1 TLR 101 at p 111

Tierney v An Post [1999] IESC 66, [2000] 1 IR 531

Uber BV v Aslam UKEAT/0056/12/DA, [2018] IRLR 97 ('Uber')

Uber BV v Aslam [2018] EWCA Civ 2748, [2019] 3 All ER 498, on 19th December, 2018)

Weight Watchers (UK) Ltd v Revenue and Customs Commissioners [2011] UKUT 433 (TCC), [2011] All ER (D) 229 (Nov)

Ó Culachain v McMullan Brothers Ltd [1995] 2 IR 217