TC09663 - [2025] UKFTT 01250 (TC)

On 10 September 2020, an “educational due diligence meeting” was held between Mr Stone, the Appellant’s agent, the SIA representative (Mark Tierney) and HMRC officers. The purpose of the meeting was to educate the Appellant on the Agency legislation, with a view to compliance. During the meeting, Mr Stone explained that the Appellant had always specialised in dog handling security and specialised searches. He further stated that:

“... Tyler provide the services of the Dog Handlers to the venues, the venues will then pay Tyler for the services and Tyler in turn pays the Dog Handlers for such services.”

The Appellant was advised that it needed to apply the Agency legislation to comply with HMRC and ACS criterion. This entailed the dog-handlers that the Appellant engaged being treated as employees for tax and national insurance purposes. Mr Stone agreed to put the dog-handlers on the Appellant’s payroll by 30 December 2020.

On 4 October 2020, Mr Stone signed the notes to the meeting.

By an email, dated 12 October 2020, Mr Borton (on behalf of Mr Stone), stated that:

“We have setup a payroll with our accountants and the majority of the handlers accept that they have to move onto a PAYE/NI scheme. There are a number of queries to be resolved but I believe our accountants can deal with these. However, one question that has popped up with the majority of our handlers and their accountants is; can we not start this at the beginning of the new tax year i.e. 6th April 2021?”

Following an extension granted to 6 April 2021, a further extension was provided to 6 July 2021 for the Appellant to apply the Agency legislation and account for the PAYE and NICs due in respect of the payments made to the dog-handlers. The Appellant continued to give assurances that it would comply with the Agency legislation.

On 1 July 2021, the Appellant’s solicitors advised HMRC that, in their opinion, the Appellant was not an agency but supplied dog detection services to its clients. They further advised that the Appellant did not supply individuals as temporary workers, or supplies for individual personal services.

On 6 July 2021, HMRC sought confirmation as to whether the Appellant would be applying the Agency legislation and fully operating PAYE/NI on the dog-handlers it currently engaged, in addition to any new dog-handlers it would engage in the future. HMRC advised that should the Agency legislation not be complied with within the agreed timeframe, then HMRC would advise the SIA of the Appellant’s non-compliance with Clause 4.2.1 of the ACS requirements (as discussed in the educational due diligence meeting). A compliance check would thereafter be opened with a view to recovering the arrears of PAYE/NI over the past six years, including interest and potential penalties.

On 9 July 2021, the Appellant confirmed it would not be complying with the Agency legislation.

On 1 February 2022, given that the Appellant had not applied the Agency legislation, a compliance check was opened. Documentation was requested in order to assist with HMRC’s enquiries.

On 3 March 2022, the Appellant was advised that, as a precautionary measure to protect HMRC’s rights to collect unpaid amounts of NI and interest (which must be collected within six years of the date that they were due), action would need to be taken through the County Court (Footnote: ⁵).