Upper Tribunal Tax and Chancery Chamber

UT/2020/000377 - [2024] UKUT 00099 (TCC)

Fecha: 15-Dic-2023

The relevant legislation

The relevant legislation

10.

The issue before the FTT which forms the subject matter of this appeal concerned the application of the intermediaries legislation to the contractual arrangements we have just described. In summary, if the intermediaries legislation applied, payments received by RALC under these arrangements would be treated for tax and NICs purposes as if they were employment income or earnings of Mr Alcock, but the liabilities to account for income tax and NICs would fall on RALC rather than Mr Alcock.

11.

The circumstances in which the intermediaries legislation could apply for the purposes of income tax were set out in section 49 ITEPA. So far as material, at all relevant times, section 49 ITEPA provided as follows:

49 Engagements to which this Chapter applies

(1)

This Chapter applies where—

(a)

an individual (“the worker”) personally performs, or is under an obligation personally to perform, services for another person (“the client”),

(b)

the services are provided not under a contract directly between the client and the worker but under arrangements involving a third party (“the intermediary”), and

(c)

the circumstances are such that—

(i)

if the services were provided under a contract directly between the client and the worker, the worker would be regarded for income tax purposes as an employee of the client or the holder of an office under the client, or

(ii)

…

(3)

…

(4)

The circumstances referred to in subsection (1)(c) include the terms on which the services are provided, having regard to the terms of the contracts forming part of the arrangements under which the services are provided.

(5)

In this Chapter “engagement to which this Chapter applies” means any such provision of services as is mentioned in subsection (1).

12.

There is an equivalent provision in the SSCI Regulations, which determines when the intermediaries legislation applies for the purposes of NICs. It is found in regulation 6 of the SSCI Regulations.

13.

The wording of section 49 ITEPA and regulation 6 of the SSCI Regulations is similar, but not identical. It was acknowledged by Henderson J in Dragonfly Consultancy Limited v Revenue and Customs Commissioners [2008] EWHC 2113 (Ch) (“Dragonfly”) (at [13] to [19]) that, in some circumstances, the differences in wording may lead to different conclusions as to the applicability of the intermediaries legislation for income tax and NIC purposes. However, the parties have proceeded on the basis that, in this case, those differences in wording do not affect the analysis. The parties made their arguments before the FTT and this tribunal by reference to the income tax provisions (in section 49 ITEPA) and on the assumption that, if the intermediaries legislation applied for income tax purposes, it would also apply for the purpose of NICs. The FTT proceeded on the same basis (FTT [36]), and we will do the same.