Brief Facts:
The Applicant filed the Application challenging a PAYE assessment of UGX 185,200,728 issued against the Institute by the Respondent regarding the treatment of persons employed by the Applicant that provide support services in research. The Applicant withheld tax instead of remitting PAYE, hence the Application.
Issues for Determination:
- Whether the individuals whose contractors are subject to the dispute are independent contractors or employees?
- Whether the Applicant is liable to pay UGX 185,200,728 as PAYE assessed by the Respondent?
Tax Appeals Tribunal Decision:
- There are three conditions for a contract of service to be established: namely, there must be a performance of a service in consideration of a wage; that he or she will be subject to another’s (master’s) control to a sufficient degree; and other provisions of the contract should be consistent with it being a contract of service.
- A person is an independent contractor if the payer controls or directs the result of the work and not what will be done and how it will be done.
The Tribunal ruled that the persons in question were employees of the Applicant and, thus, the Applicant was obliged to pay PAYE.
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