Upper Tribunal Tax and Chancery Chamber

UT/2023/000068 - [2024] UKUT 00262 (TCC)

Fecha: 25-Abr-2024

FTT’s self-direction

FTT’s self-direction

58.

The first question is whether the FTT correctly directed itself in law in addressing the Third RMC Stage. We have set out above, at [8]-[10], the overall approach which should be adopted in determining whether IR35 applies, and the context in which the Third RMC Stage falls to be considered. In relation to the Third RMC Stage, the Court of Appeal in Kickabout said (at [104]) that “the court’s task at that stage is to examine all relevant factors, both consistent and inconsistent with employment, and determine, as a matter of overall assessment, whether an employment relationship exists.”

59.

The FTT directed itself as to the approach which it should take at FTT[130] and [133], as follows:

130.

In Atholl House, the Court of Appeal reviewed the relevant case law applying the RMC test, and the legal principles emanating from the review in AthollHouse on the third stage of the RMC test are summarised as follows.

(1)

The court or tribunal is required to weigh any terms, which are contrary to a conclusion of employment against those terms, including mutuality of obligation and control, which favour a conclusion of employment; it is a multi-factorial process addressing all the relevant factors: at [76].

(2)

The court or tribunal is not restricted in its analysis to the terms of the contract; this is clear from Market Investigations Ltd v Minister for SocialSecurity [1969] 2 QB 173 (‘Market Investigations’) and many subsequent cases, including Hall v Lorimer [1994] ICR 216: at [113].

(3)

It is wrong to treat RMC and the line of cases including Hall v Lorimer as representing two separate tests. Both are ‘multifactorial’ approaches which recognise mutuality of obligation and the right of control as necessary pre-conditions to a finding that a contract is one of employment: at [122].

(4)

A strict reading of the third condition in the RMC test might exclude consideration of any factor beyond the express and implied terms of the contract as in some authorities. In many other authorities, however, a wider range of factors was taken into consideration, such as Matthews v HMRC [2012] UKUT 229 (TCC) (‘Matthews’): at [122].

(5)

The question for the court or tribunal is whether, judged objectively, the parties intended when reaching their agreement to create a relationship of employment. That intention is to be judged by the contract and the circumstances in which it was made. To be relevant to that issue any circumstance must be one which is known, or could be reasonably be supposed to be known, to both parties: at [123].

…

133.

The case law principles are all reminders of the centrality of the contractual relationship in issue, even at the third stage of the RMC test. The focus at the third stage remains anchored on the contract in issue, but the angle of the focus widens out to take in the context and circumstances in which the contractual relationship is created; the direction of the perspective is to zoom out from the contract in issue. The flaw in the tribunals’ approach in Atholl House, as I understand it, is to approach the third stage from the peripherals, focusing on Ms Adams’ career outside the relevant contract, and zoom in from the circumstantial factors to construe the relevant contract in the light of Ms Adams having been in business on her own account. The flaw of the UT’s approach in Atholl House is analysed by the Court of Appeal at [125] to [139].

60.

We consider this to be a very helpful and accurate summary by the FTT of the approach which should be taken at the Third RMC Stage.

61.

Therefore, we are mindful in approaching Ground 2 of the guidance given by the Court of Appeal in DPP Law Ltd v Greenberg [2021] EWCA Civ 672:

[58]…where a tribunal has correctly stated the legal principles to be applied, an appellate tribunal or court should, in my view, be slow to conclude that it has not applied those principles, and should generally do so only where it is clear from the language used that a different principle has been applied to the facts found. Tribunals sometimes make errors, having stated the principles correctly but slipping up in their application, as the case law demonstrates; but if the correct principles were in the tribunal’s mind, as demonstrated by their being identified in the express terms of the decision, the tribunal can be expected to have been seeking faithfully to apply them, and to have done so unless the contrary is clear from the language of its decision.

62.

We must nevertheless decide whether, looking at the decision in its entirety, the FTT in fact failed to follow its self-direction in some material respect (Footnote: ⁵).