The scandal of self-employed cleaners on London Underground


AGS people and LUL are complicit in a tax evasion scam whereby they use the self-employed status of workers to avoid paying employers National Insurance liabilities to HMRC, SSP and holiday pay to the workers and destroy pretty much every right a worker in the UK enjoys.
Workers, even agency workers, have certain rights and protections. A self-employed cleaner has none. I would be interested to see the actual contract between the self-employed and LUL or its sub-contractor, if one even exists.

DEFINITION of 'Tax Evasion' An illegal practice where a person, organisation or corporation intentionally avoids paying his/her/its true tax liability. Those caught evading taxes are generally subject to criminal charges and substantial penalties.

I am shocked that hundreds of our cleaners are on self-employed contracts, but only getting the same hourly rate as their colleagues employed directly. Where is the benefit for the worker? It’s a one sided contract of employment. These workers are not bone fide limited liability companies, the agency are forcing their employees to declare falsely they are operating as an independently owned small trader.

“Disguised employees - illegal under HMRC rules”

This practice is known as disguised employees and is illegal under HMRC rules. This agency AGS people, with London Underground in full knowledge and agreement, are syphoning millions of tax payers’ money straight into their pockets. To add insult to injury, the deliberate evasion of paying employers tax liabilities to HMRC is being overlooked by those meant to ensure public bodies, such as LUL/TfL are discharging their responsibilities.

The official term used by HM Revenue & Customs (HMRC) is a "disguised employee", which describes individuals who are directly employed by a company, but cheat the tax system by claiming they are a freelance or contract worker. But many would argue that the "cheat" is as likely to be the employer as the individual. Employers use outsourcing and casualising of their workforce to save on national insurance, pensions, holiday pay, and above all to skirt employment law. In general, employees have rights – especially regarding dismissal – that casuals and contractors don't. Indeed, some employers insist that individuals structure themselves into a personal service company so they don't have to pay national insurance and can fire them at will.

HMRC has long tried to weed out disguised employees. The law already states that employees cannot resign and start work again in their previous job employed as a company. As long ago as 1999, then Chancellor Gordon Brown ordered a clampdown on disguised employees through what became known as "IR35". It set out a number of tests designed to catch companies and individuals avoiding tax.

When is an employee not an employee? - When they work as a cleaner on London Underground

So how can you spot a disguised employee? It's not only about the length of engagement; a contractor can, legally, remain with one company for years. HMRC looks at a number of tests. Broadly speaking, if someone behaves like an employee and is treated like an employee, they probably are an employee, and can't be paid gross. HMRC couches it in terms such as "control" and "substitution".

• Control. Does the employer have control over the individual, deciding when and where they work? Can the employer move the individual to a variety of tasks? Does the employer require the individual to work the same hours as other workers? Does the employer decide which part of a project the individual will carry out? Does the individual have to request when they can take time off? Is he or she expected to "busy themselves" when work on a particular project dries up? If the answer to any of these questions is yes, it's likely the individual is an employee, not a freelance or contractor.

• Substitution, If the individual can't substitute someone else to do their work, they may be regarded as an employee. This is where some high-profile figures in the media may find the rules challenging. They can set up a company that provides services, but if the TV or radio station won't accept anyone but the HMRC may argue they are, in fact, an employee.

• Right of refusal. This is crucial. In an employee/employer relationship, there is something called "mutuality of obligation". If a contractor can't prove they have the right to refuse work, it suggests they are an employee.

• Business premises. Does the individual own or rent business premises separate from their home and from where they are contracted to work?

• Efficiency. Can the individual finish a contract early? Can they, for example, agree a £10,000 fee for three months work and finish it in two? If so, they are a contractor. If they are expected to do something else for that other month, they are probably an employee.

• Assistance. Does the individual engage other workers who bring in at least 25% of turnover? Then the "personal service company" would, in the eyes of the HMRC, appear genuine.

• Advertising. Has the individual spent at least £1,200 in the past 12 months on advertising? This is evidence they are a genuine small business seeking work.

These tests are designed to catch people who behave like employees, but get paid by a limited company. In the last budget the tests were tightened further, with a package of measures to "tackle avoidance through use of personal service companies".