[2025] UKUT 00124 (TCC) George Mantides Limited v HMRC: Further ammunition for HMRC in its battle against self-employment in healthcare?

One of the unusual aspects of the First-tier Tribunal (“FTT”) decision in Mantides (which was the subject of this appeal to the Upper Tribunal (“UT”)) was the split finding that Dr Mantides, who was a locum doctor urology specialist, was employed for his engagement with the Royal Berkshire Hospital (“RBH”), but self-employed for his engagement with the Medway Maritime Hospital (“MMH”). This was despite the fact that there was very little difference between the two engagements (other than the existence of a well drafted contract for the MMH engagement). 

Dr Mantides appealed to the UT against the finding that his engagement with RBH was deemed employment for tax purposes. In a decision released on 7 April 2025, he has subsequently lost that appeal, with the UT holding that the RBH engagement was deemed employment for tax purposes.

HMRC initially sought to cross-appeal the finding that Dr Mantides was self-employed for his engagement with MMH, however that appeal was made late and not permitted to proceed. Accordingly, the UT appeal continued just in respect of the RBH engagement. 

Wider Sector Activity

Whilst the Mantides case concerns one locum doctor, the case is potentially of wider relevance given the apparent battle that HMRC is waging against self-employment for tax purposes in the healthcare sector. 

HMRC is currently, or has recently, challenged locum doctors, locum (or ‘associate’) dentists, locum pharmacists, locum opticians and others in the healthcare sector. 

As regards the ongoing HMRC legal challenge against locum pharmacists, it has been reported that the pharmacy sector could face a £550m retrospective tax bill if locum pharmacists are classed as employees. HMRC had previously published guidance confirming that locum pharmacists could be treated as self-employed for tax purposes (providing certain conditions were met) (see ESM4270). That guidance was withdrawn by HMRC on 30 June 2023, in the context of the ongoing dispute between pharmacy chains and HMRC.

Guidance for dentists (ESM4030) was also withdrawn, with effect from 6 April 2023. It was previously accepted by HMRC that ‘associates’ who operated under the standard British Dental Association or Dental Practitioners Association contracts would be treated as self-employed. That confirmation has now also been withdrawn. 

In short, self-employment in healthcare is under attack. There are consequently a number of cases under appeal with HMRC or proceeding before the FTT. The Mantides case is likely to be relevant to disputes in this space. 

Which rules apply?

The Mantides case concerned the application of the ‘old’ IR35 rules (Chapter 8, Income Tax (Earnings and Pensions) Act 2003 (“ITEPA”)), first introduced in April 2000. 

The ‘old’ IR35 rules continue to be relevant in determining employment status for tax of workers engaged through intermediaries (including ‘personal services companies’) (e.g. John Smith engaged through John Smith Limited) where the ‘end client’ is subject to the small company exemption (note that the small company exemption has increased from April 2025 – see here). Under the old IR35 rules, compliance responsibility (i.e. determining whether someone is properly classified as employed or self-employed for tax purposes) sits with the contractor and their intermediary. 

The old IR35 rules were partially replaced, and off-payroll compliance shifted to the ‘end client’ for public sector end clients in April 2017, and to private sector medium and large end clients (i.e. those not benefiting from the small company exemption) from April 2021 (under Chapter 10 of ITEPA). 

Directly engaged contractors (i.e. those not operating through intermediaries, such as personal services companies), are also subject to employment status for tax challenges under PAYE rules (including Part 2, ITEPA 2003). Under the PAYE rules (subject to certain exceptions), compliance sits with the engaging entity. 

There are separate rules for agency workers and managed services companies, which are beyond the scope of this note. 

In short then, regardless of the employment structure (and healthcare sector locums typically operate under all these engagement structures), employment status is open to challenge by HMRC. As such, whilst the Mantides case concerns the old IR35 rules, the lessons should be noted more broadly. 

Key findings

The following key findings were made by the UT in Mantides:

• Termination periods. The RBH agreement was found to be terminable without notice. The UT found (paragraph 41): “In our view it is a factor which points against employment. However, it is a weak factor in the context of a relatively short, temporary engagement”.
• Successive engagements (upholding the decision of the FTT). It was held that: “While successive engagements may in some cases point to the carrying on of a business on one’s own account, in this case the existence of three separate engagements in 2013-14 does not point to self-employment”.
• Equipment (upholding the decision of the FTT). It was held that “The fact Mr Mantides used the hospital’s equipment and staff points only weakly to employment”.
• Financial risk (upholding the decision of the FTT). It was held that: “The fact that Mr Mantides negotiated his rates of pay, bore the cost of training and complying with GMC registration requirements and of travel and accommodation when away from home, and would receive the benefit when he worked longer hours, point only weakly to self-employment”.

Further, it was held that: “The fact Mr Mantides bore the cost of insurance cover does not add greatly to the strength of the pointers to self-employment”.

• Integration (upholding the decision of the FTT). It was held that: “There was some integration with the hospital organisation, which points weakly to employment”.
• Extent of control (upholding the decision of the FTT). It was held that: “The degree of control actually exercised over Mr Mantides was a neutral factor”.
• Benefits (upholding the decision of the FTT). It was held that: “The lack of any employee benefits points away from employment”.

It should be noted that the extent of control, particularly the importance of regulatory control and the relevance of the control of third parties (i.e. controls dictated by persons other than the engager) is an area of particular interest for HMRC, especially following the Supreme Court decision in Commissioners for His Majesty's Revenue and Customs v Professional Game Match Officials Ltd (“PGMOL”) [2024] UKSC 29. 

It may well be frustrating to HMRC that the UT in Mantides considered (as regards the facts of this case) the extent of control to be a “neutral factor”. Following PGMOL, and the Court’s finding that there need only be a “sufficient framework of control” (a very wide concept), HMRC have been quick to assert ‘control’ – especially in the context of their healthcare sector challenges. 

What should businesses in the healthcare sector do in response?

Given the number of ongoing challenges to employment status for tax in the healthcare sector, businesses engaging off-payroll workers are well advised to take advice and audit their current engagement structures, making changes to the engagement structure as necessary. In this context, regard should be had for the findings in Mantides. 

It seems likely that had it been open to the UT in Mantides to do so, that they would have also found the MMH contract to be one of employment. A procedural error by HMRC (not appealing in time) has potentially saved Dr Mantides from a wider issue. 

Whilst this is a complicated subject worthy of its own article altogether, it is also possible for businesses to seek to hedge some of their historic and future employment tax risks using insurance.  Advice should be taken on the availability of this option. Again however, prior to putting insurance in place to cover historic risks, a full audit would often need to be carried out. 

If you are impacted by any of the issues raised in this article, then please do not hesitate to reach out to the author.