Weight Watchers to lose thousands of pounds

Posted: 27th February 2012

ScalesHM Revenue and Customs (HMRC) have won another significant battle in their quest to reclassify ‘self-employed’ workers as employees after slimming club Weight Watchers (WW) failed to persuade the Upper Tribunal that its ‘Leaders’ are genuinely self-employed.
The WW system involves holding regular meetings for members which are organised by the Leaders, who work under a contractual relationship with WW that is clearly intended to be a self-employed contract, not a contract of employment. If a Leader is unable to hold a scheduled meeting, they can arrange for another suitable person to hold it and, if one cannot be found, WW will take on the responsibility for finding a replacement. The ability to arrange for someone to carry out work instead of the contracted person is normally a persuasive factor that the contract is one of self-employment.
The First-Tier Tax Tribunal’s ruling that the Leaders are employees of WW was upheld by the Upper Tribunal, however, on the ground that the degree of supervision and control exercised by WW over the Leaders is indicative of an employer/employee relationship, as is the ‘mutuality of obligation’ inherent in the contract.
The decision will cost WW thousands of pounds in Income Tax and National Insurance and is likely to be appealed.
HMRC are taking a very aggressive attitude to ‘self-employed’ contracts and are attacking them with regularity. If you use self-employed people to work for you on a regular basis, contact us to review your arrangements.