James Anderson has been working for Bucks New University as an IT technician for the last three years. James is very experienced and well respected by the University for his excellent work

James Anderson has been working for Bucks New University as an IT technician for the last three years. James is very experienced and well respected by the University for his excellent work. His contract with the University is such that he only shows up when he is called for an IT related problem (s). James is provided with a small van which is registered in the name of Bucks New University. James is expected to pay for the cost of the VAN. Therefore, an agreed monthly payment is deducted from his wages before the remainder of his invoice is paid to him. James is not expected to make any payment if he does not work for BNU in any month. James can keep the Van after paying for the cost of the van in full.  James is responsible for paying for the cost of insurance, fuel, maintenance and tax.

BNU provides all the tools that James uses for his work. The University does not prohibit James from using the tools for other private job. The University has made it clear to James that the provision of tools is a kind gesture and that it has no obligation to do so. Consequently, James cannot expect to be provided with current and future tools, neither is the University obliged to repair his working tools when they break down.

James Anderson bills the University at the end of every month with the number of hours he had worked for the month.

James is provided with a Bucks New University entry card which has his name on it and is allowed to utilise most of the facilities such as the gym and the canteen at the same cost as employees do.

Due to his experience and honesty, James is the preferred person to undertake all IT related job. He is not allowed by the University to use his own substitute IT technician when he is unavailable. James is entitled to one month paid holiday per annum where he will not be called to work by the University. His one-month holiday pay is calculated using his average monthly earnings for the last three months. Aside the one-month holiday, James must endeavour to honour all other appointments. The implication is that, James cannot decline work when offered to him by Bucks New University unless the contract is abrogated.

The University has a chief regulatory officer who oversees the activities of James and signs any work he has done off before he is paid.

Mr James Anderson has heard about the new HMRC regulation called IR35 and is thus confused as to whether the nature of his contract is that of a contract of service or a contract for services. James has approached you to advise him as to the nature of his contract. He will also like to know how he should be treated for tax purposes after determining the nature of his contract.

Required:

• Define and explain the two terms ‘contract of service and contract for services’ and show their implications for tax purposes. (20 marks).
• Based on the information provided in the case study and further research including decided court cases, advice Mr James Anderson as to whether he is an employee or a self-employed person working for Bucks New University. (50 marks).
• Advise James Anderson as to the tax implications of his employment status determined in (2) above. (20 marks).

Note that marks will be awarded for Structure. Structure includes the orderly presentation of relevant material and the extent of research evidenced by the appropriateness and adequacy of in-text referencing and bibliography. There must be a Cover Page and Contents Page, paragraphs of Introduction and conclusion and pages must be numbered. Recommendations, especially in Task 2 (e) above, must be realistic, relevant and capable of practical implementation. (10 marks).