Mark McLaughlin looks at what qualifies as ‘work’ for certain tax-related purposes.
What constitutes ‘work’? There can sometimes be differences of opinion between employers and employees on this question! However, it may also cause disputes between taxpayers and HM Revenue and Customs (HMRC).
Whether an activity constitutes work can be an important issue for tax purposes.
Work and residence
For example, the statutory residence test (SRT) is a set of rules to establish whether an individual is resident in the UK for tax purposes. Time spent working is relevant for various purposes in the SRT, such as the ‘automatic’ overseas or UK tests, and the ‘sufficient UK ties’ test (i.e., an individual will have a ‘work tie’ if they work more than three hours in the UK on at least 40 days in the tax year).
‘Work’ for SRT purposes includes doing something in the performance of employment duties, or (for the self-employed) in their trade. Travelling and training costs are also included if certain conditions are met (FA 2013, Sch 45, para 26).
Paid enough?
The meaning of ‘work’ is also relevant for national minimum wage (NMW) purposes. A family member living at home as part of the family and helping with family chores does not qualify for the minimum wage (see HMRC’s National Minimum Wage Manual at NMWM05160).
The NMW regulations define work in negative terms; it broadly excludes work carried out by a family member, living at the employer’s home, and sharing in family tasks and activities. In addition, workers who live in the employer’s home as part of the family (but who are not members of that family) and share in tasks and leisure activities need not be paid the NMW for work relating to the employer’s household. ‘Work’ in the employer’s family business is also excluded if the worker is a family member who lives in the family home (SI 2015/621, regs 57, 58).
Furthermore, the NMW does not need to be paid for work done under informal arrangements between friends and neighbours (NMWM05170).
Social media
Most people have social media accounts. LinkedIn focuses on business networking. Others (e.g., Facebook, Instagram) are popular mixed (business and non-business) platforms; but is it possible to discern between work and leisure?
In Glo-ball Group Ltd v Revenue and Customs [2023] UKFTT 435 (TC), the appellant company ran parties, discos, community events and after-school clubs, and parent and baby groups. A director and employee (Michelle) was a class leader; classes would be advertised via social media, including Facebook. Michelle and a co-director and employee (Sam) both spent time on social media generating interest in the company’s services (Sam estimated about 15 hours a week). However, during the Coronavirus lockdown, the time spent on social media reduced dramatically (e.g., in April 2020 there were only three posts, whereas before lockdown there would have been 80 or 90).
The company claimed payments under the coronavirus job retention scheme (CJRS) in respect of Michelle (CJRS payments could be made for ‘furloughed employees’ who ceased all work for the employer for 21 calendar days or more). HMRC subsequently considered that social media posts by Michelle on Facebook during her furlough constituted disqualifying work for CJRS purposes. Unfortunately for the company, the First-tier Tribunal agreed.
Practical tip
Be careful when distinguishing whether an activity constitutes ‘work’ as it may be important for tax and other (e.g., NMW) purposes.
