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

The parties disagreed as to the nature of HMRC’s challenge under Ground 2. Mr Collins characterised it as a challenge to the FTT’s evaluative conclusion and an impermissible attack on the weight given by the FTT to different factors. Mr Stone accepted that the FTT’s overall conclusion was evaluative, but denied that HMRC were challenging weight, or any of the FTT’s primary findings or its overall conclusion. Rather, said Mr Stone, HMRC’s position was that errors of law arose because the FTT took into account irrelevant factors and failed to take into account material factors as required at the Third RMC Stage. This was not, he said, an Edwards v Bairstow attack.

Mr Stone referred to the decision in WM MorrisonSupermarkets PLC v HMRC [2023] UKUT 00020 (TCC) (“Morrisons”). In that case, the parties disagreed as to what constituted an error of law in a multi-factorial assessment where the FTT failed to take into account a material factor. The Upper Tribunal discussed the well-established principle that an appellate tribunal should be slow to interfere with an evaluative multi-factorial assessment, but then said this, at [34] (emphasis in original):

In Morrisons, HMRC argued that an error of law arose only where the relevant matter was one which no tribunal properly instructed would have left out of account, so the decision was “perverse”. The Upper Tribunal disagreed, stating (at [39]) “while a requirement to show the decision is perverse applies in relation to matters of weight/evaluation, failing to take account of a relevant factor or taking an irrelevant factor into account will constitute an error of law (albeit there will be subsequent issue of whether any such error is material to the decision in question)”. At [43], the Upper Tribunal stated that while a perversity hurdle must be surmounted where the challenge concerns the factual issue of whether a factor was probative on the facts of the case, a challenge as to whether a factor was relevant, as a matter of principle, does not face such a hurdle, and is a question of law.

We agree with the distinction drawn in Morrisons, described above, and have approached Ground 2 on the basis that HMRC’s challenge is not that the FTT afforded to much or too little weight to a factor, or that its overall conclusion was perverse or irrational, but rather that the FTT took into account at the Third RMC Stage factors which were as a matter of principle irrelevant, or failed to take into account at the Third RMC Stage factors which were as a matterof principle relevant. In the context of this appeal, relevance is determined by reference to whether a factor is indicative of employment status. It is important to state at the outset that even if we find that the FTT made such an error, we must still determine whether that error was material to its decision; we discuss this below.