Employment status of Lecturers, Teachers and InstructorsFriday, October 14th, 2011
HMRC consults again on the NICs status of lecturers, teachers and instructors.
In October 2009, HMRC published a consultation document entitled Lecturers, teachers, instructors or those in a similar capacity – In relation to the amendment of the Social Security (Categorisation of Earners) Regulations 1978.
In certain specific situations, the Social Security (Categorisation of Earners) Regulations 1978 and the equivalent Northern Ireland regulations dictate that a self-employed person must be treated as an employee for NICs purposes. The workers affected by these rules are those working under conditions that are similar to employment and whose security of employment is such that they would be exceptionally vulnerable if they were not entitled to contributory state benefits. Among the workers specified in the regulations are lecturers, teachers, instructors and other persons working in a similar capacity. They are treated as self-employed for tax purposes but as employees for NICs purposes.
The 2009 consultation document discussed the published guidance on this subject and the difficulties in applying the rules that had been identified in the vocational training sector due to the diverse circumstances in which vocational training is delivered. Concluding that a further revision of the guidance would not help, HMRC proposed to make adjustments to the Regulations themselves.
In March 2010, HMRC published a review of the responses to the consultation. Overall, the responses were not supportive of HMRC’s proposals and raised a number of issues relating to both the interpretation of the Regulations and the impact of their application. As a result, HMRC has decided to consult further with stakeholders to identify the most effective and appropriate way forward. The proposed April 2010 amendments to the Regulations were withdrawn and the 1978 Regulations have continued to apply in the meantime.
On 7 October 2011, HMRC published a new consultation document on the subject. It indicates a reversal in HMRC’s approach. HMRC’s position in the context of the first consultation was that the Regulations apply to vocational and well as academic tuition and there needed to be adjustments to the Regulations to clarify that situation. However, in the light of the responses to the first consultation, HMRC is now of the view that the original 1978 rationale in requiring lecturers, teachers and instructors to pay Class 1 NICs despite their self-employed status is no longer valid due to changes in the way instruction is delivered and in the current structure of contributory benefits. As a result, HMRC has now concluded that the Regulations relating to lecturers, teachers, instructors and those in a similar capacity are no longer necessary and should be repealed.
Comments are sought on the extent to which the current Regulations apply in the affected business sectors, the perception of their effect on individuals delivering academic tuition, and any difficulties experienced by providers of academic tuition. The consultation period closes on 6 January 2012.