George Mantides IR35 ruling ‘limited by errors and case law shifts’
An Upper Tribunal judgment on a urologist’s IR35 status gets the ‘interesting’ treatment. A contractor urologist was correct to say…
Kingsbridge issues alerts on personal service, in wake of the doctor found inside IR35 largely because he couldn’t send someone in his place.
Substitution is mainly behind a doctor being found by a superior court to be outside IR35 at one hospital but inside IR35 at another.
Asked about the ‘interesting IR35 case of Dr George Mantides,’ advisers yesterday told Kingsbridge that ‘personal service’ likely had the most clout at both hospitals.
Substitution was a factor that led the First-Tier Tribunal to rule Dr Mantides outside IR35 at Medway Maritime Hospital (MMH), for urology work in 2013.
In front of the Upper Tribunal (UT) in 2021 about the second contract – at Royal Berkshire Hospital (RBH) – Mantides said it was broadly identical to his MMH contract.
‘Mantides’ hypothetical contracts indistinguishable’
On behalf of Mantides, barrister Michael Paulin even called the RBH hypothetical contract “indistinguishable” from the MMH hypothetical contract.
The thrust of the argument put to the UT was that as both contracts were extremely similar, the RBH gig must be outside IR35 just as the MMH gig was.
Paulin, of 1 Crown Office Row, described the differences between Mantides’ two hypothetical contracts as “vanishingly small”, bar a small “right of substitution”.
‘Ensure consistency’
In fact, Mantides could theoretically send a worker in his place at MMH, but the barrister said both gigs still required him to carry out the roles personally.
To “ensure consistency”, the UT should therefore rule the urologist outside IR35 at RBH to mirror his outside IR35 status at MMH, the barrister submitted.
But the UT disagreed, saying its focus must be on the facts and terms of the RBH hypothetical contract, not to “simply compare” it with a different one.
‘Three material differences between Mantides’ MMH and RBH contracts’
And even under such a comparison, one of “three material” ways Mantides’ MMH contract differed from his RBH contract was substitution.
In its judgment, the Upper Tribunal ranked substitution first, as the top of those three ways.
The UT said: “Under the notional contract with MMH, Mantides would have a right to send a substitute if that substitute was approved by the agency”.
‘Substitution not an illusory right for George Mantides Ltd’
UT judges Thomas Scott and Jonathan Cannan continued: “This right would not in [our] view be illusory: it could have been exercised and taken effect.
“And although its counterpart in reality was not exercised its existence would be a relevant pointer away from employment.
“The qualified nature of the right, and the fact that… evidence indicated that the hospital might have resisted its exercise, convinced [us] that the contract could, just, be described as one for Mr Mantides’ personal service, but the existence of the right points away from employment.”
‘Turning point’
Yet “unlike the MMH contract, which would have contained a limited right of substitution,” the RBH contract “would have been for the personal services of Mr Mantides,” states the UT judgment, adding:
“And there would have been no right of substitution.”
ReLegal Consulting, an off-payroll working rules advisory, says: “The turning point [at the UT hearing] appears to be the lack of a ‘right’ to substitution [at RBH].
“Mantides [at Royal Berkshire Hospital] was obliged to provide his services personally.”
‘Sufficient framework of control’
As a result, the UT judges concluded (of Mantides’ RBH gig) that there was a “sufficient framework of control for that contract to be an employment contract.”
Informed by the PGMOL case, the judges also found Mutuality of Obligation to be present, “in the sense of a wage-work bargain”, despite RBH not being obligated to offer work.
Matt Tyler, a manager at IR35 insurer Kingsbridge, unpacked these classic IR35 status factors all going against Mantides, resulting in him losing his IR35 appeal.
‘Right to substitute more helpful to outside-IR35 contractors’
“The take-home for contractors and clients from George Mantides Limited versus HMRC at the Upper Tribunal is that Mutuality of Obligations should NOT be ignored.
“But as is increasingly the case,” he says, “Control and Personal Service – most often demonstrated by a genuine right to substitute – are going to be considerably more helpful to contractors in arguing for their [outside] IR35 position.”
‘Contract and engagement must marry up’
Issuing the first of a few alerts to limited company contractors, Tyler emphasised the word ‘genuine’ in relation to a right of substitution provision.
He says: “Interestingly, MMH agreed that a substitution clause was present in their contractual terms, but [they claimed they] would have… resisted any move [by Mantides] to utilise such a right.
“This highlights the importance for contractors of ensuring that the contract and reality of the engagement marry up as much as possible.”
‘Follow up to see if genuine right attached to substitution clause’
Pressed yesterday about how to ensure that marriage, practically, Kingsbridge’s IR35 Consultancy Manager responded with another alert.
“If there is such a clause in your contract, follow up on it with the end client. Your company needs to see if there’s a genuine right attached to said clause or not,” he said.
“If there is no intention to allow substitution, do not have it present in the contractual terms.”
‘Sham clauses’
Tyler further warned: “Having ‘sham’ clauses in your contract as a limited company contractor will ultimately be to your detriment – should HMRC pick up your engagement for an IR35 enquiry”.
With these ‘sham’ clauses, Tyler had substitution in mind, potentially including clauses that grant only a passive right to merely suggest a worker in one’s place.
But speaking last night, two veteran healthcare contractors said fake, flimsy and spurious contractual provisions were currently prolific in the UK medical sector.
‘NHS providers want to have their cake and eat it’
“Unfortunately, some NHS providers want to have their cake and eat it,” Stephen Mhiribidi, a locum radiographer, began in a statement to Kingsbridge.
“These providers use somewhat dodgy direct engagement schemes that send out supposed self-employment contracts but, at the same time, the providers want to pay you as an employee.
“In my experience, this approach is being taken solely so these providers can avoid employer obligations that might otherwise accrue. At the same time, a lot of these schemes deprive HMRC of much-needed tax receipts.”
‘Healthcare locum market awash with direct engagement VAT avoidance schemes’
Similarly speaking in a personal capacity, the head of AI Policy, Ethics and Transformation at The Healthcare Leadership Academy, Dr Iain Campbell, said the freelance clinical sector was “awash” with sham contracts for 2025/26.
“The locum market is, sadly, as of April 2025, awash with direct engagement, aggressive, VAT avoidance schemes,” Dr Campbell started to Kingsbridge.
“They deprive the exchequer of vital funds when locums are engaged. And some of these schemes have started claiming workers to be self-employed… in a move that looks designed to deprive the workers of employment rights.
“Yet, paradoxically, they include bizarre clauses designed to charge these [supposedly self-employed] workers PAYE.”
‘Mantides case reinforces IR35 case law, since PGMOL’
The widespread nature of “direct engagement” roles appears at odds with the concept of substitution – the factor that largely led to the UT’s remaking of the RBH contract going in HMRC’s favour.
But it wasn’t the only factor.
From Kingsbridge’s Tewkesbury HQ yesterday, Mr Tyler said: “As it currently stands, the IR35 case of George Mantides has simply reinforced the position on Mutuality of Obligations outlined in PGMOL itself.
“And that is – in most instances – an agreement to undertake work for a client in exchange for payment is often enough to establish Mutuality of Obligations between the parties.
“Big picture? This is now… the seventh win in a row for HMRC, which is certainly setting the impression that HMRC’s interpretation of case law around IR35 is – for now – accurate.”
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Simon Moore, Managing Director at Moore News Ltd
Simon Moore is a journalist with NCTJ-approved journalism training, who has worked inside the newsrooms of local, consumer and national media titles.
He today writes news and features for trade publications specialising in freelancing, small business and the self-employed. Simon’s articles have been linked to by The Daily Telegraph and the biggest newspaper website in the world, MailOnline. He was appointed to be a judge at IPSE Freelancer’s Awards 2023.
