In George Mantides Ltd v HMRC [2025], the Upper-tier Tax Tribunal has concluded that a doctor, who worked via his own personal services company (“PSC”), fell inside IR35 and was deemed to be an employee of the hospital at which he worked, despite the fact that the hospital was not obliged to provide him with work and despite either party being able to terminate the arrangement without notice. The doctor’s earnings from the hospital were therefore subject to income tax and national insurance.
Facts of the case
Dr Mantides carried out contracts via his PSC with both Royal Berkshire Hospital (“RBH”) and Medway Maritime Hospital (“MMH”). HMRC made a determination that his contracts with both hospitals fell inside IR35. Dr Mantides appealed to the First-tier Tax Tribunal (“FTT”).
In determining whether Dr Mantides was inside or outside IR35, the FTT had to imagine that his PSC didn’t exist and that he had entered into a contract directly with the hospitals. The FTT had to decide what would have been the terms of those hypothetical contracts.
The FTT concluded that if Dr Mantides had entered into a contract directly with MMH, then he would not have been deemed to be an employee of MMH for income tax and national insurance purposes. That is to say, his contract with MMH was found to be outside IR35. HMRC attempted to appeal but they submitted their application too late.
However, in relation to RBH, the FTT concluded that Dr Mantides was a deemed employee, i.e his contract with RBH was inside IR35. One of the main reasons for this was because the FTT decided that in the hypothetical contract with RBH (unlike the hypothetical contract with MMH), Dr Mantides would have been required to give one week’s notice to terminate the contract and RBH would have been under an obligation to use reasonable endeavours to provide 10 half day sessions of work to Dr Mantides each week.
Dr Mantides appealed the FTT’s judgment in relation to RBH to the Upper-tier Tax Tribunal (“UT”). The UT found fault in the FTT’s reasoning and set the FTT’s decision aside. Specifically, the UT found that the evidence available to the FTT did not support the FTT’s conclusion that Dr Mantides would have been required to give one week’s notice to terminate the contract, or that RBH had an obligation to provide him with a minimum amount of work each week. However, the UT then went on to consider the hypothetical contract between Dr Mantides and RBH again itself, and still came to the ultimate conclusion that Dr Mantides’s contract with RBH was inside IR35.
The UT concluded that Dr Mantides was required to provide personal service to RBH and he was not permitted to send a substitute. The UT also found that there was a sufficient framework of control and mutuality of obligation (in the PGMOL sense of the term; see further below). The UT decided that other factors were either neutral (in terms of the degree of actual control) or pointed only weakly towards employment (Dr Mantides’s use of the hospital’s equipment and staff) or self-employment (Dr Mantides bearing his own costs, including insurance, and a lack of employee benefits such as holiday pay).
PGMOL
The decision in Dr Mantides’s case had been put on hold pending a final decision from the Supreme Court in HMRC v Professional Game Match Officials Ltd [2024] (the “PGMOL” case), which related to whether football referees were deemed employees. The UT wanted to hear the Supreme Court’s decision in PGMOL before reaching a decision in relation to Dr Mantides.
The PGMOL case principally concerned mutuality of obligation and control. The takeaways from that case were:
- A watering down of the importance of mutuality of obligation, meaning that it can no longer be seen as a determining factor of employment status. Specifically, the Supreme Court referred to mutuality of obligation as a ‘wage-work bargain’, meaning a requirement on one party to work and a requirement on the other party to pay for that work. In that sense, mutuality of obligation exists in almost every case where a person performs services and receives payment for those services.
- Control must be considered holistically. In the case of an expert professional, there may only be minimal control exercised over them, but this does not necessarily mean that they are truly self-employed.
In light of PGMOL, the UT in Dr Mantides’s case decided that:
- Although RBH did not exercise tight control over what Mr Mantides did (because he was an experienced professional doctor), the hospital was entitled to exercise sufficient control to establish employment.
- Even though RBH did not have an absolute obligation to provide 10 half day sessions of work to Dr Mantides per week, the UT decided that the hospital was under a duty to use reasonable endeavours to provide those sessions during the period of the contract, and that, when taken with the overarching requirement for Dr Mantides to do work and RBH to pay him for that work, this was sufficient to satisfy the requirement for mutuality of obligation as watered down by PGMOL.
Key takeaways
Taken together with the PGMOL judgment, the Mantides case demonstrates the increased difficulties in challenging inside IR35 findings, especially when seeking to rely on a lack of mutuality of obligation.
The case also arguably creates an element of confusion in circumstances where employment status cases are already highly fact-sensitive and nuanced, as two nearly identical hypothetical contracts (with MMH and RBH) were subject to different findings by the FTT, although it is worth noting that this may not have been the case had HMRC submitted its appeal in relation to the MMH contract in time.
Finally, as umbrella companies, agencies and self-employed contractors will already know, the law in relation to employment status claims is constantly evolving. Who knows whether the UT may have reached a different conclusion in relation to Dr Mantides if the PGMOL case had not been heard yet. It is vital that contractors, agencies, umbrella companies and end-user clients stay up-to-date with case law developments and seek advice if they are unsure how to apply those developments in practice when determining a person’s employment status.
