Seamus Lynch ( Inspector of Taxes) v Neville Brothers Limited
[2004] IEHC 375

The issue in this case was whether Gerard Mulqueen (Mulqueen) was engaged by Neville Brothers Limited (Nevilles) as an independent contractor (contract for services), in the capacity of a merchandiser or whether he was engaged as an employee (contract of service). If an employee relationship existed, the merchandiser was an insurable person and within the PAYE system of taxation. If the contract was a contract for services the merchandiser was self-employed for taxation and social welfare purposes.

Nevilles supplied bread and confectionary to various stores, including the Dunnes Stores group of companies (Dunnes), where Mulqueen was engaged to ‘merchandise’ Nevilles products. Nevilles appointed Mulqueen to unload bread and similar products, which were delivered by the company to Dunnes in return for a fee of IR£25 per day. This was billed by the merchandiser each week and payable in arrears. A contract between Nevilles and Mulqueen stated that Mulqueen was to be available each day with the exception of Sunday, and that he could appoint individuals to work on his behalf. It also provided that Mulqueen was to be regarded as an independent contractor and not a servant of the company. Mulqueen was also to bear exclusive responsibility as a self-employed person for the discharge of income tax, VAT and social welfare contributions arising out of fees in respect of the work carried out under the agreement.

The Inspector of Taxes argued that Mulqueen was employed under a contract of service on the basis that he did not supply any equipment; took no financial risk; received remuneration fixed by contract and had no responsibility for investment and management of the business. On the other hand, counsel for Nevilles focused on the ‘control test’ (although it was recognised in the judgment that this was not a sole test – but an important one). Mulqueen had to ensure that Neville’s products were continuously on the shelves, which meant that they could merchandise the products at any time, but were not under any obligation to perform the services personally. Mulqueen could and did delegate the merchandising work to others without clearance from anybody else. Neither, was Mulqueen integrated into Nevilles organisation. He did not work at their premises, was not a member of the pension scheme, did not have prospects of promotion, was not subject to employee disciplinary procedures and also provided services to other suppliers.

Carroll J acknowledged that no single ‘test’ applied when determining if an individual was engaged under a contract of service or contract for services. However, in her opinion, the Revenue failed to persuade her that Mulqueen was an employee and therefore held that the Circuit Court was correct in holding that a merchandiser engaged by Nevilles was an independent contractor.