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HM Revenue and Customs Brief 25/09

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HM Revenue and Customs -Tax Authorities

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Issued 1 April 2009

The First Aid training sector and the Social Security (Categorisation of Earners) Regulations 1978

The current position

The Social Security (Categorisation of Earners) Regulations 1978 (the Regulations) need only be considered where there is a contract for services (self-employment).

HM Revenue & Customs’ (HMRC) interpretation of the Regulations in terms of lecturers, teachers, instructors or others in a similar capacity who are engaged to provide instruction in an educational establishment is currently set out in guidance at ESM 4503 which will be shortly revised. The revised ESM 4503 is published below.

The comments below are by way of additional assistance. HMRC's view is that the Regulations apply where a lecturer, teacher or instructor etc provides instruction in:

  • courses in a school, college or university
  • courses of an academic/vocational nature at any place where the instruction is provided (for example, outdoors or at a client site)

A course is covered by the Regulations whether or not it leads to a certificate, diploma, degree or professional qualification. In practice, HMRC's view is that courses in the latter category fall within the Regulations where the completion of the course represents a substantive achievement. HMRC's view of what represents a 'substantive achievement' is the attainment of a recognised qualification, licence or skill which provides access to a particular job or the authority to conduct a particular activity in the workplace.

It is clear from discussions with the First Aid training sector, that the requirement that a course represents a substantive achievement is causing difficulty because of the diverse nature of courses provided by the sector (different courses being delivered by the same trainer in the same week), the nature of the courses, the circumstances under which they are provided, to whom they are provided and where they are provided. It is also clear that there are wide-ranging and firmly held views in the sector on the application of the Regulations.

HMRC need to have regard to the fact that the Regulations apply to training providers outside the First Aid sector. Accordingly HMRC propose to review whether the current Regulations should be amended in view of the nature of training delivery today.

The way forward

To inform the review and recommendations to Ministers, HMRC will undertake an informal consultation with the training sector, including the First Aid training sector, on the scope of the Regulations and their practical application.

HMRC will in due course publish an announcement about the consultation on its website. Simultaneously HMRC will write directly to identify interested stakeholders including those in the First Aid training sector with whom there has been discussion.

In the meantime, training providers in the First Aid sector should follow HMRC's revised ESM 4503, drawing on this bulletin as necessary, when deciding whether particular courses and instructors fall within the scope of the Regulations.

Where training providers cannot determine the status of their teachers, lecturers or trainers by applying the revised ESM 4503 and this bulletin, they should contact HMRC on Tel 08457 143 143 quoting this Revenue & Customs Brief 25/09 'The First Aid Training Sector and the Social Security (Categorisation of Earners) Regulations 1978'.

Revised ESM 4503

ESM4503 - Particular occupations: teachers, lecturers and instructors - NICs

SS (Categorisation of Earners) Regulations 1978 (SI 1978 No.1689) Regulation 1(2), Regulation 2, paragraph 4 in Part I of Schedule 1 and paragraph 6 in Schedule 3

Most teachers etc are engaged either part-time or full-time under a contract of service.

Where they are not, the above Regulations make provision for treating most teachers, who are not employed under a contract of service, as employees.

They provide for a teacher, lecturer or instructor who teaches in an 'educational establishment' to be treated as an employed earner if they teach in the presence of their students (unless they are working for the Open University); and are paid by the Education Authority or the person who provides the education.

Exceptions

Do not treat a teacher, lecturer or instructor as an employed earner if:

  • the time the person spends teaching/lecturing is minimal in terms of the working time available or the instruction is given only occasionally. In practical terms this means that prior to giving the instruction, they have agreed to give it on not more than 3 days in 3 consecutive months; or
  • the instruction is given as public lectures. A public lecture is regarded as one which any member of the public can attend without prior notice; that is, it is not part of a course or confined to a particular group or society.

What is an educational establishment?

An educational establishment is defined in Regulation 1(2) as including

  • a place where instruction is given leading to a certificate, diploma, degree or professional qualification; or
  • a place where instruction is given which follows substantially the same type of syllabus but which is not designed to lead to such a certificate, diploma, degree or professional qualification.

In practice, therefore, an educational establishment can be either a recognised educational establishment: for example a school, university or college or anywhere else (indoors or outdoors) where instruction is given. The case of St. John’s School, Cambridge v Secretary of State for Social Security gives further guidance on this point – see ESM7230. What is important is the nature of the instruction.

The Regulations should be applied to all teachers, lecturers or instructors providing instruction in a school, college or university regardless of the nature of the instruction, whether it is given outside normal school hours or whether the particular course leads to a certificate, diploma, degree or professional qualification.

Where the instruction is given in a place which is not a recognised educational establishment such as a school, college or university, the Regulations should be applied only to those teachers, lecturers or instructors who are giving instruction on courses which result in the attainment of a recognised qualification, licence or skill which provides access to a particular job or authority to conduct a particular activity in the workplace. This is irrespective of whether such instruction results in the provision of a certificate, diploma or such similar document.

Who provides the education?

The teacher, lecturer or instructor delivering the instruction must be engaged by a person providing education. (Para 4, Part 1 of Schedule 1)

That person may be:

  • A local authority, Board of Governors of a school or any other type of training organisation such as a company or partnership; or
  • An individual (where they are engaged directly by the client to deliver the instruction)

Who pays the teacher, lecturer or instructor?

The earnings in respect of the employment must be paid by, or on behalf of, the person providing the education. (Para 4(c) Part 1 of Schedule 1)

Example 1 - Recognised educational establishment

If a school engages a teacher, guarantees the payment of fees for that instruction and is responsible for ensuring that any fees due are paid by the parents, the school is paying the teacher.

If the teacher has contracted directly with the parents, receives his/her fees either via the school or direct from the parents and has to personally pursue non-payment of fees with the parents, the teacher is regarded as not being paid by the school. So the condition in paragraph 4(c) is not satisfied and the teacher continues to be a self-employed earner.

If it is stated that the previous paragraph applies, confirm the facts carefully and check for evidence before accepting that the provisions are not satisfied. Do not assume that the school is liable just because it includes the particular instruction in its syllabus or sets the fees but verify that it is also responsible for finding the teacher and any necessary replacements.

Example 2 - Vocational or skills training in a non recognised educational establishment

Where a local authority or business contracts with a training organisation that provides a trainer to train its staff, that organisation receives payment direct from the local authority or business and pays the trainer for delivering the training, the Regulations will apply. In this situation the training organisation is treated as the secondary contributor.

Issuing opinions under the Regulations

Always use the draft letter at ESM0110 when giving an opinion under these Regulations.


About the Author

© Crown Copyright 2009.

A licence is need to reproduce this article and has been republished for educational / informational purposes only. Article reproduced by permission of HM Revenue & Customs under the terms of a Click-Use Licence. Tax briefs are updated regularly and may be out of date at time of reading.



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Article Published/Sorted/Amended on Scopulus 2009-04-04 12:05:44 in Tax Articles

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