In MyPay Limited v HMRC [2026] TC09902, the First Tier Tribunal (FTT) found that workers engaged by an umbrella company were employed separately for each assignment rather than under a single overarching employment contract, meaning travel expenses between home and assignment locations were ordinary commuting expenses and therefore not deductible.
MyPay operated as an Umbrella company employing workers who undertook temporary assignments for end-user clients in sectors including the NHS, public sector bodies and private engineering firms.
Recruitment agencies sourced assignments and agreed assignment details directly with workers, including the work involved, duration and pay rates, before contracting with MyPay to supply the worker.
- MyPay's role was to formally employ the workers and assume employer obligations, such as PAYE and National Insurance Contributions (NICs) compliance, while retaining a percentage of the assignment income.
- The workers themselves sourced and arranged new assignments through the agencies, rather than MyPay allocating work to them.
- MyPay encouraged workers to seek further assignments through CV updates, networking and social media, but could not require workers to take assignments or independently place them into work.
- Many workers moved directly from one assignment to another, although gaps between assignments could occur.
- MyPay used written 'Statements of main terms and conditions of employment', with pre-2014 and post-2014 versions.
- The statements provided very limited detail about pay, location, duties or hours of work, with these matters generally left to be agreed for each assignment.
- Post-2014 statements stated that MyPay would 'offer' a minimum of 336 hours of work annually, but did not require workers to accept work offered.
- MyPay also relied on an HMRC dispensation granted in 2008, arguing alternatively that the travel expenses were covered by that dispensation.
- The dispensation covered certain travel expenses incurred "whilst away from the normal place of work" but expressly excluded "any element of home to office travel".
- HMRC issued PAYE determinations and NIC decisions totalling more than £618,000 in relation to Travel expense reimbursements paid during the 2014-15 and 2015-16 tax years.
- It was common ground that workers were employed by MyPay during assignments. The dispute concerned whether employment also existed during gaps between assignments.
- MyPay argued there was a single overarching employment contract covering both assignments and the intervals between them, meaning that assignment locations were Temporary workplaces and travel costs were deductible under Sections 338 and 339 of the Income Tax (Earnings and Pensions) Act (ITEPA) 2003.
- HMRC argued that each assignment constituted a separate employment because there was insufficient Mutuality of obligation between assignments.
The First Tier Tribunal (FTT) found that:
- The central issue was whether sufficient mutuality of obligation existed between assignments to create one continuous employment contract.
- The contractual documentation was too vague on core employment matters, such as pay, duties, hours and workplace, to establish continuous employment between assignments.
- The tribunal concluded that these terms were intentionally non-specific because assignments were individually negotiated by workers and agencies on an assignment-by-assignment basis.
- During gaps between assignments, MyPay was not obliged to provide work or pay wages, and workers were not obliged to accept or perform work.
- The wording that MyPay would 'endeavour' to provide work did not create a legally enforceable obligation to offer work.
- The guarantee to 'offer' 336 hours annually also failed to establish mutuality because workers had no obligation to accept such work.
- Clauses requiring compliance with instructions, working hours and reporting obligations were interpreted as applying only while workers were on assignments.
The tribunal held that MyPay's contractual arrangements were framework agreements under which separate contracts of employment arose for each assignment.
- The FTT relied heavily on recent case law, including PGMOL, Mainpay and Exchequer Solutions, which confirmed that umbrella company workers may have intermittent employment rather than continuous employment.
- It rejected any suggestion that moving immediately between assignments changed the legal analysis, because the relevant question was whether contractual obligations existed during the intervening periods.
- The tribunal held that each assignment location was a permanent workplace for the duration of that assignment and, therefore, travel from home to the assignment was ordinary commuting.
- MyPay's travel expense reimbursements were not deductible under s.338 ITEPA 2003.
- On the alternative argument, the FTT found that the 2008 dispensation did not apply because the relevant expenses were home-to-work travel and therefore expressly excluded from the dispensation wording.
The appeal was dismissed.
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