Sham Self-employment

Sham self-employment in UK tax law and labour law refers to situations where individuals are classified or present themselves as self-employed when, in reality, their working conditions and relationship with their employer resemble those of an employee. This classification can be used by employers to avoid paying employer National Insurance contributions and to circumvent employment rights and protections that would otherwise apply to these individuals if they were recognised as employees.

The criteria distinguishing between genuine self-employment and employment involve several factors, including the degree of control the employer has over the worker, whether the worker is obliged to carry out the work personally, and the level of financial risk taken by the worker. For example, if the employer dictates how, when, and where the work is done, this suggests an employment relationship rather than self-employment.

The UK government and HM Revenue & Customs have been actively addressing sham self-employment due to its impact on workers’ rights and its potential for tax avoidance. IR35, also known as the off-payroll working rules, is one of the key legislations aimed at tackling disguised employment, where self-employed contractors work in similar conditions to employees but through an intermediary, such as their own limited company.

The distinction between being genuinely self-employed and being an employee is crucial for tax purposes, as it affects the way income is taxed and how National Insurance contributions are calculated. Misclassification can lead to legal challenges, penalties, and back payments of taxes and National Insurance contributions.
Back to blog

UOL Case Bank

Upon joining, you become a valuable UOL student and gain instant access to over 2,100 essential case summaries. UOL Case Bank is constantly expanding. Speed up your revision with us now.

Subscribe Now

Where are our students from?

Council of Europe
Crown Prosecution Service
Baker Mckenzie 
Yale University
University of Chicago
Columbia University
New York University
University of Michigan 
INSEAD
University of London
University College London (UCL)
London School of Economics (LSE)
King’s College London (KCL)
Royal Holloway, University of London 
Birkbeck, University of London
SOAS, University of London
University of Manchester
University of Zurich
University of York
Brandeis University
University of Exeter
University of Sheffield
Boston University
University of Washington
University of Leeds
University of Law
University of Kent
University of Hull
Queen’s University Belfast
Toronto Metropolitan University
Hong Kong University of Science and Technology
University of Buckingham
ESSEC Business School

  • Criminal Practice

    Diagrams and Charts

    Our carefully designed diagrams and charts will guide you through complex legal issues.

  • Criminal Law

    Clear and Succinct Definitions

    Key concepts are concisely defined to help you understand legal topics quickly.

  • Property Law

    Statutory Provisions

    Statutory provisions are provided side by side with legal concepts to help you swiftly locate the relevant legislation.

  • Public Law

    Case Summaries

    We have summarised important cases for you so that you don't need to read long and boring cases.

  • Evidence

    Rules and Exceptions

    Rules and exceptions are clearly listed so that you know when a rule applies and when it doesn't.

  • Company Law

    Terminology

    Legal terms and key concepts are explained at the beginning of each chapter to help you learn efficiently.

  • Case Law

    Case law is provided side by side with legal concepts so that you know how legal principles and precedents were established.

  • Law Exam Guide

    Law Essay Guide

    You will learn essential law exam skills and essay writing techniques that are not taught in class.

  • Law Exam Guide

    Problem Question Guide

    We will show you how to answer problem questions step by step to achieve first-class results.

  • Conflict of Laws

    Structured Explanations

    Complex legal concepts are broken down into concise and digestible bullet point explanations.

  • Legal System and Method

    Legal Research

    You will learn legal research techniques with our study guide and become a proficient legal researcher.

  • Jurisprudence and Legal Theory

    Exam-focused

    All essential concepts, principles, and case law are included so that you can answer exam questions quickly.