Religious Leader's Employment Contract 'Was Illegally Performed'

13th July 2023 By

Those who seek the protection of the law with metaphorical dirty hands are likely to receive short shrift. An Employment Tribunal (ET) powerfully made that point in the case of a religious leader who had engaged in tax evasion.

The man launched proceedings after his engagement as a temple’s head priest was terminated. Following a hearing, the ET found that he was an employee and that his dismissal was unfair. His complaints that he had not received the National Minimum Wage or holiday pay to which he was entitled were also upheld.

The ET found, however, that he and the employer had agreed at the outset that he would be treated as self-employed. That was a mischaracterisation of their true relationship. He either knew or ought to have known that he was, in truth, an employee.

The ET was satisfied that he knew from the start that the employer would not be deducting Income Tax or National Insurance Contributions (NICs) from his pay via the PAYE system. Over a period of three years, he took no steps himself to declare his income from his work at the temple to HM Revenue and Customs (HMRC). His failure to pay tax and NICs on that income was neither careless nor inadvertent, but deliberate and seriously wrong.

The employer turned a blind eye and its failure to take steps to ensure that he was declaring his income to HMRC, in circumstances where it knew that it was not doing so, was at best reckless and seriously wrong. However, the man was, if anything, more at fault in that he knew for a fact that no tax or NICs were being paid on his income, either by the employer or by him. His conduct was extremely serious and amounted to tax evasion.

Although there was no suggestion that his employment contract was itself illegal, the ET found that it was performed in an illegal manner. On that basis, the entirety of his claim was dismissed. Given that his complaints were otherwise meritorious, the ET recognised that this was a severe sanction.

However, when his receipt of voluntary donations from his congregation was taken into account, the sums in unpaid tax and NICs were very substantial and were likely to far exceed any compensation he might have been awarded. There was thus a real risk of him being unjustly enriched were he to succeed in his claim. Given the central public importance of upholding the integrity of the tax and justice systems, the outcome of the case was, the ET ruled, proportionate.

Source: Concious

Latest News

Challenge to Will's Validity Rejected by High Court

12th April, 2024 By

The best way to ensure your assets will be distributed as you wish is to have your will professionally drafted by a qualified solicitor. In a recent case, a challenge to the validity of an elderly man's will was dismissed by the High Court. The man had previously made a will in 2011, leaving most of his estate equally to his three children. In 2018, by which time one of his sons had predeceased him, he made a further will, leaving the residue of his estate to his other son...

Defiance of Family Court Orders Will Always End Badly

10th April, 2024 By

Custodial sentences very rarely come into play in the family courts. Where there have been repeated breaches of court orders, however, judges may have little choice but to clamp down. This was illustrated in the High Court during committal proceedings that stemmed from a child custody dispute. The background to the case involved contested proceedings between the father and mother of a young child. These concluded with a court order establishing that the child – a daughter – would live with the mother. Three months later the daughter travelled with...

Claim for SDLT Relief on Annex Unsuccessful

8th April, 2024 By

When buying a property consisting of more than one residence, it may be possible to claim multiple dwellings relief (MDR) against Stamp Duty Land Tax (SDLT). However, there are certain conditions that must be met for an MDR claim to succeed, as a recent case illustrates. A property was purchased for £1.8 million. Prior to the purchase, the buyer had agreed with the seller that he would be allowed to carry out works to construct a self-contained annex at the property. The buyer's SDLT return included a claim for MDR...

Divorce – Alleged Bigamy Raised in Financial Remedies Dispute

5th April, 2024 By

The issue of bigamy and its potential impact on a person's ability to seek financial remedies in a divorce came under the legal spotlight recently. A husband made an application to strike out his wife's financial remedies claim on the basis that she had committed bigamy and deceived him into a marriage when she knew she was not free to marry. This deceit, he claimed, was so egregious that, as a matter of public policy, she should be debarred from pursuing any claim for financial remedies against him. The husband based...