Upper Tribunal Tax and Chancery Chamber

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

Fecha: 06-Feb-2024

The legislation and the issue before the FTT

The legislation and the issue before the FTT

The purpose of the intermediaries legislation was described by Robert Walker LJ (as he then was) in R (Professional Contractors Group & Others) v IRC [2001] EWCA Civ 1945 at [51], as being:

to ensure that individuals who ought to pay tax and NICs as employees cannot, by the assumption of a corporate structure, reduce and defer the liabilities imposed on employees by the United Kingdom's system of personal taxation.

The question whether the intermediaries legislation applies to any particular set of circumstances is determined by reference to sections 48-61 of the Income Tax (Earnings and Pensions) Act 2003 (“ITEPA 2003”). The equivalent provision for NICs purposes is Regulation 6 of the Social Security Contributions (Intermediaries) Regulations 2000. The parties agree that in the circumstances of this appeal there is no material difference in the effect of the two sets of provisions. Therefore, as did the FTT, we focus in this decision on the provisions in ITEPA 2003.

Section 49 ITEPA 2003 provided as follows:

(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 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.

…

(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.

The FTT found that section 49(1)(a) and (b) were satisfied on the facts in relation to the contracts relevant to this appeal. Mr Chiles is “the worker”, ITV and the BBC are “the client” and BBL is “the intermediary”. The only issue for the FTT was whether, if the services provided by Mr Chiles had been provided under contracts directly between ITV/BBC and Mr Chiles, Mr Chiles would have been regarded for income tax purposes as an employee of ITV/BBC (Footnote: ¹).