Upper Tribunal Tax and Chancery Chamber

UT/2023/000018 - [2024] UKUT 00165 (TCC)

Fecha: 06-Feb-2024

the FTT’s decision

the FTT’s decision

16.

The Decision was methodical, thorough and detailed (some 357 paragraphs). References below in the form FTT[x] are to paragraphs of the Decision.

17.

The FTT set out the background at FTT[1]-[4] as follows:

Mr Adrian Chiles is a well-known television and radio presenter. He started work at the BBC as a journalist in 1992 at the age of 25. In or about 1996 the BBC required Mr Chiles to cease his employment with a view to his services being provided through what is known as a personal service company. He set up the appellant (“BBL”) for that purpose and ceased his employment. At the same time, BBL entered into contracts with the BBC for the provision of Mr Chiles’ services. By 2010, BBL was providing Mr Chiles’ services to the BBC to present three different programmes, namely ‘The One Show’, ‘Match of the Day 2’ and ‘The Apprentice: You’re Fired’.

In June 2010, BBL’s contract to provide Mr Chiles’ services to the BBC came to an end and BBL entered into a contract to provide his services to ITV. Mr Chiles was to be a presenter on ITV’s new flagship breakfast television programme called ‘Daybreak’, as well as presenting ITV’s coverage of live football and certain other factual entertainment programmes. ITV’s football coverage included Champions League and international football matches. BBL contracted with ITV to provide Mr Chiles’ services in relation to those programmes. Mr Chiles ceased to be a presenter of Daybreak in November 2011 but BBL’s contract with ITV continued and he continued to present live football on ITV until 2015.

In 2013, BBL contracted with the BBC for Mr Chiles to present programmes on BBC Radio 5 Live. Mr Chiles continues to present programmes on BBC Radio 5 Live.

This appeal is concerned with tax years 2012-13 to 2016-17, covering the period from 6 April 2012 to 5 April 2017. During that period BBL provided Mr Chiles’ services pursuant to two ITV contracts (“the ITV Contracts”) and three BBC contracts (“the BBC Contracts”) in addition to other work for other parties. HMRC have issued determinations in respect of income tax and notices of decision in respect of national insurance contributions (“NICs”) to BBL for those tax years.

18.

The FTT had available to it all the evidence which was before the FTT at the first hearing, and made detailed primary findings of fact in the following areas:

(1)

Mr Chiles’ work history before and during the period covered by the appeal: FTT[23]-[57].

(2)

The ITV Contracts and the BBC Contracts (together the “Contracts”): FTT[58]-[110].

(3)

The negotiation of the Contracts: FTT[111]-[123].

(4)

The performance of the Contracts: FTT[124]-[178].

(5)

Mr Chiles’ work and income outside the Contracts: FTT[179]-[192].

19.

The FTT set out its approach to determining the terms of the hypothetical contracts. It noted that section 49(1)(c) ITEPA 2003 requires a focus on the actual contracts and the arrangements pursuant to which the services are provided. The FTT followed the approach suggested by the Upper Tribunal in HMRC v Atholl House Productions Limited [2021] UKUT 37 (TCC) (“Atholl House UT”) of approaching the construction of the hypothetical contracts as a counter-factual exercise, in which the written contracts are “a safe starting point”, but having regard to certain “hypothetical flashpoint scenarios” in which there would be a conflict between the written terms and the conduct of the parties.

20.

The FTT set out its findings as to the terms of the hypothetical contracts in Annexes to the Decision, explaining at FTT[196]-[201] the reasons for those findings.

21.

In this appeal, HMRC do not challenge the FTT’s primary findings of fact or its conclusions as to the terms of the hypothetical contracts.

22.

The FTT set out the relevant case law on employment status, taking as its starting point the statements in RMC. As regards the three RMC conditions, the FTT decided as follows:

(1)

It was accepted by BBL that there would be sufficient mutuality between Mr Chiles and the BBC under the BBC Contracts. The FTT decided that there was also sufficient mutuality between Mr Chiles and ITV under the ITV Contracts: FTT [207]-[222] and FTT [281]-[288].

(2)

In relation to all of the Contracts, there was a sufficient framework of control to satisfy the control condition: FTT[223]-[244] and FTT[289]-[317].

(3)

In relation to the Third RMC Stage, the FTT discussed the arguments of the parties and the relevant case-law in considerable detail, at FTT[245]-[278]. The FTT’s reasoning and conclusion form the basis of this appeal. In brief summary, the FTT decided as follows. It considered that the most significant factor which might displace the prima facie case that Mr Chiles was an employee under the hypothetical contracts was whether he was in business on his own account, but only if the hypothetical contracts could properly be seen as part of that business. It stated that this was the approach taken in Atholl House UT and other cases: FTT[320]. Having considered that question, the FTT then discussed a number of factors which HMRC relied on as supporting employment status: FTT[334]-[353]. The FTT’s conclusion, at FTT[354], was that in relation to all of the Contracts, the hypothetical contracts would not have been contracts of employment, and, as a result, BBL’s appeal was allowed.

23.

BBL do not challenge by way of cross-appeal or Respondent’s Notice the FTT’s findings as to the existence of mutuality and control. The only issue in this appeal is whether, as HMRC contend, the FTT erred in law in its determination of the Third RMC Stage.