Upper Tribunal Tax and Chancery Chamber

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

Fecha: 25-Abr-2024

the ftt’s decision

the ftt’s decision

16.

After setting out the arguments of the parties, the FTT identified the issue for determination and that the burden of establishing that Mr Barnes would not be regarded as an employee of Sky pursuant to the hypothetical contract was on SLB.

17.

In relation to the construction of the hypothetical contract, the FTT recorded that the parties agreed that there were no material differences between the First and Second Contracts, so that a single hypothetical contract could be constructed and taken as applicable to the entire relevant period: FTT[103].

18.

In relation to the extent to which circumstantial factors outside the actual Contracts should be taken into account in constructing the hypothetical contract, the FTT referred to the guidance on this issue given by the Court of Appeal in HMRC v Atholl House ProductionsLimited [2022] EWCA Civ 502 (“Atholl House”). The FTT drew two principles from that guidance. First, the terms of the hypothetical contract must be derived from all the circumstances in which the relevant services were provided, taking as a starting point the terms of the actual contracts: FTT[108]. Second, “what is admissible in the factual matrix in constructing the hypothetical contract is limited to Sky’s awareness of Mr Barnes’ engagements with the Times and the Sunday Times, and with other broadcasters for high-profile games not broadcast by Sky”: FTT[110].

19.

At FTT[111], the FTT set out its conclusions as to the material terms of the hypothetical contract. We have set out those terms in the appendix to this decision. With the exception of its findings in relation to Sky’s right of first call over Mr Barnes, which are the subject matter of the first ground of appeal, the parties do not challenge those conclusions.

20.

The FTT then applied the RMC test to the hypothetical contract, and decided that the parties “did not intend the Contracts to be the exclusive record of the terms of their agreement”, but that “the terms of agreement between the parties are to be gathered partly from documents, and partly from their conduct”: FTT[115] and [116].

21.

The FTT noted that SLB had conceded that the mutuality and control tests in RMC were satisfied. However, the FTT considered it necessary to reach its own view on those issues, guided by advice as to the importance of doing so in Atholl House. The FTT concluded that mutuality was indeed satisfied. In relation to control, the FTT also found that there was a sufficient framework of control over Mr Barnes in the performance of his services.

22.

At FTT[127]-[138], the FTT considered the Third RMC Stage, under the heading “Other Provisions and Factors”. The FTT referred to the principles derived from Atholl House at FTT[130], as follows:

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 Atholl House 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].

23.

The FTT referred to the focus at the third stage remaining anchored on the contract in issue, but taking into account the context and circumstances. The FTT then listed various factors which it considered to be relevant at the third stage, which we will need to deal with in detail below. The FTT concluded that the Contracts would not have been contracts of employment: FTT[135].