![UT/2023/000088 - [2024] UKUT 00209 (TCC)](https://backend.juristeca.com/files/emisores/logo_ICfrj4g.png){kind=logo}
Background
Background
The Appellant is a limited liability partnership, established on 24 August 2009, of which a member is Barry Cowan, a former professional tennis player and more recently a tennis commentator.
Mr Cowan performed services as a tennis commentator for Sky UK Limited (“Sky”) from around 2013. The appeal, had it been admitted by the FTT, would have concerned the engagement between the Appellant and Sky in respect of the provision of Mr Cowan’s services as a commentator on Sky Sports’ tennis programmes during the 2013/14 to 2018/19 tax years (the “Sky Contract”) and whether the intermediaries legislation, commonly known as IR35, applied to that engagement.
As a result of HMRC’s review of the Appellant’s Sky Contract, determinations made under regulation 80 of the Income Tax (Pay as Your Earn) Regulations 2003 (the “Determinations”) and notices under section 8 of the Social Security and Contributions (Transfer of Functions) Act 1999 (the “Notices”) were issued in respect of the 2013/14 to 2018/19 tax years, which were appealed by the Appellant to HMRC. The charges under the Determinations and Notices were stood over, pending the outcome of the review of the contractual arrangements. Essentially, HMRC assert that during the relevant tax years the arrangements between the Appellant and Sky are such that had they taken the form of a contract between Mr Cowan and Sky, Mr Cowan would be regarded as employed by Sky with the result that additional income tax and class 1 national insurance contributions were due.
So far as relevant to the present appeal, the following correspondence was exchanged between the parties:
On 17 June 2021, HMRC issued an opinion (dated 18 June 2021) stating that HMRC had considered communications between HMRC and both the Appellant’s representative and Sky. HMRC reached the conclusion that, applying IR 35, under a notional contract between Mr Cowan and Sky, Mr Cowan would be regarded as employed by Sky with the result that additional income tax and class 1 National Insurance Contributions were allegedly due. The letter stated:
“… my opinion assumes that the information you have supplied accurately reflects the basis on which services are provided and only applies to the contract that has been supplied by you. If the contract is not fully acted upon in practice or there are other oral or implied conditions which have not been presented to me, my opinion may be modified.
…
If I have misunderstood or misinterpreted anything within the information supplied to me, please let me know. I will of course readdress any consequent issues and advise you accordingly. If you disagree with the contents of this letter you should tell me by the date mentioned below why you think it is wrong and provide any further information and/or documentation that you think is relevant. I will consider what you tell me and advise you accordingly. If I do not hear from you by 19 July 2021, I will assume your agreement …”
The Appellant’s representative, Mr Leslie, disagreed with the opinion, setting out 23 disputed points in an email on 8 July 2021 commenting that the decision was unsafe and completely incorrect.
Notwithstanding the final paragraph of HMRC’s letter of 17 June 2021, HMRC did not respond to the detailed points raised by Mr Leslie in his email of 8 July 2021. Instead, by a letter which was dated 9 December 2021, but which was sent under cover of an email on 8 December 2021, HMRC provided its “view of the matter”. So far as relevant, the letter stated:
“Having reviewed the relationship between [Sky] and [the Appellant] … our view remains the same as set out in our opinion letter … that had there been a contract between Barry Cowan personally and [Sky] it would be considered a contract of service i.e. employment. As such, the engagement is subject to the “Intermediaries” Legislation (IR35).
…
To settle the appeal, you have the option to either accept HMRC’s current view regarding the status, take up our offer of an internal review by an HMRC officer who has had no previous dealings with the case or refer the appeal to the Tribunal Service. If you take up the offer of an internal review you will have the opportunity to provide any further information or reasons in support of your case. The review officer will write and tell you the outcome of their review. If you opt for a review you can still appeal to the tribunal after the review has finished.
If you disagree with HMRC’s position, you have 30 days from the date of this letter within which to either accept my offer of an internal review by replying to this letter or notify the appeal to tribunal.
If you neither accept the offer of a review nor notify the appeal to the tribunal, the appeal will be treated as settled by agreement under section 54(1) of the Taxes Management Act 1970 on the basis of my view of the matter as set out above.”
On 8 December 2021, within 23 minutes of receiving HMRC’s email of 8 December 2021, the Appellant’s representative sent an email which stated:
“You say your view has not changed but you have failed to respond at all to any of the points we have raised in our email dated 9/7/21.
So is this how you intend matters to progress, that is, you simply ignore the points we have raised and carry on regardless?
No wonder we have raised a complaint in this case and if this is the best you can do, we are raising another complaint as this response is completely unacceptable.
… please reply by 22 January 2022. If you can’t reply by this date, then let us know.”
The Appellant lodged a complaint in respect of the non-disclosure of certain documents and material obtained by HMRC from Sky TV. That complaint was upheld in April 2022, but the relevant material was not disclosed until July 2022.
On 17 January 2022, HMRC made a without prejudice approach to the Appellant to settle the dispute.
By letter dated 26 January 2022 (but again sent the day before), HMRC informed the Appellant that the matter was now treated as settled by agreement in accordance with section 49C(4) Taxes Management Act 1970 (“TMA”), on the basis that the 30-day statutory time limit had elapsed and the Appellant had neither accepted the offer of an internal review nor notified an appeal to the FTT, and as explained in the “view of the matter letter”. The Appellant’s representative indicated he would not accept the settlement and would raise a third complaint:
“There is no way the matter is going to be settled in this way.
Your 'opinion' dated 18/6/21 was full of holes and errors, plus it also seemed to rely on information that you purport to have come from Sky, however, as explained, we have not seen this correspondence.
You are well aware of our position and I sent you a very long e-mail on 8/7/21, so am still awaiting your detailed response, rather than your very short letter dated 9/12/21 which I received by e-mail on 8/12/21 and to which I responded the same day, but have received nothing further from you until today.”
HMRC explained, in an email dated 2 February 2022, that the Appellant had failed to meet the statutory deadlines and they were required by operation of section 49C(4) TMA to treat the appeal as settled.
On 2 February 2022 HMRC confirmed that as there had been no request for review or notification of appeal the provisions of section 54(1) TMA bought the matter to a close. By an email response the same day the Appellant’s representative continued to argue that the dispute would or should remain open until HMRC had fully responded to the points raised in the email of 9 July 2021 and pending disclosure of the Sky correspondence and documentation. It was also contended that December and January were busy months for the representative. At this point a request was made for a review.
On 16 February 2022, the Appellant’s representative indicated that an internal review should not be pursued unless a response was provided in respect of points raised in earlier correspondence. The representative did not explain why the offer of a review was not accepted in time.
By way of a letter dated 17 February 2022 (although sent the day before), HMRC rejected the Appellant’s late acceptance of the offer of a review on the basis the Appellant had not provided a reasonable excuse for the late request for a review.
In the email response to that letter the Appellant’s representative communicated his understanding that the dispute had, in fact, been referred for a review. However, he continued to contend that prior to such a review it was necessary for HMRC to provide a response to the points raised in his email of 9 July 2021 and for disclosure of the Sky documentation. Further reference was made to the without prejudice offer to settle. HMRC responded confirming that the offer of an internal review had not been accepted and indicating that the reasons provided for failure to request an in-time review did not represent a reasonable basis for granting a late review.
Finally, on 10 March 2022 an appeal was notified to the Tribunal. The Notice of Appeal was dated 18 February 2022 but the Appellant accepted that it was not sent to the Tribunal until 9 March 2022 and was received one day later. The appeal was therefore, on HMRC’s view, brought 61 days out of time. (Footnote: 1) The Appellant, before us, argued that the FTT had actually accepted that the deadline was 25 January 2022, and therefore the appeal was filed 42 days late.