FS CONSULTING LTD v PATRICK MCCAUL (HMIT) (2002)

Sp Comm (Dr Nuala Brice) 22/1/2002

TAX - EMPLOYMENT

NATIONAL INSURANCE CONTRIBUTIONS : INDIVIDUAL WORKERS : SERVICE COMPANY : INTERMEDIARIES : ARRANGEMENTS : EMPLOYED EARNER'S EMPLOYMENT : PROVISION OF SERVICES TO CLIENT VIA AGENCY : SOCIAL SECURITY CONTRIBUTIONS AND BENEFITS ACT 1992 : SOCIAL SECURITY CONTRIBUTIONS (INTERMEDIARIES) REGULATIONS 2000 SI 2000/727 : SOCIAL SECURITY (CATEGORISATION OF EARNERS) REGULATIONS 1978 SI 1978/1689

There was nothing to indicate that Reg.6(1)(c) Social Security Contributions (Intermediaries) Regulations 2000 SI 2000/727 did not apply where the arrangements to employ the services of a consultant involved both an intermediary and a non-intermediary.

Anonymised decision on an appeal by the taxpayer ('the appellant') from decisions by the Inland Revenue ('the Revenue') that the circumstances of the arrangements between the appellant's sole employee ('S') and a third party ('Better') for the performance of services by S were such that, had they taken the form of a contract between S and Better, S would be regarded for the purposes of the Social Security Contributions and Benefits Act 1992 as employed in employed earner's employment by Better, with the consequence that the appellant was liable to pay primary and secondary Class I national insurance contributions in respect of S's attributable earnings from that engagement.

S was a computer consultant and the sole director and shareholder of the appellant.

During the relevant periods S supplied his services to the appellant, who supplied them to an agency ('Topper'), who supplied them to Better.

The Revenue contended that the circumstances of those arrangements fell within Reg.6(1)(c) Social Security Contributions (Intermediaries) Regulations 2000 SI 2000/727.

The appellant contended that: (i) "the arrangements" mentioned in Reg.6(1)(b) and (c) were those involving the intermediary (the appellant), but not those involving Topper, which was not an intermediary as defined; (ii) had those arrangements taken the form of a contract between S and Better, S would not be regarded as employed by Better, in particular because under those arrangements Better paid remuneration to Topper rather than to S; and (iii) the arrangements involving Topper were governed by the Social Security (Categorisation of Earners) Regulations 1978 SI 1978/1689, but that under those Regulations S was not treated as falling within the category of an employed earner because he was not subject to supervision, direction or control as to the manner of rendering his services.



HELD: (1) With regard to (i), the legislation was not entirely clear as to its application in relation to the position where the arrangements involved both an intermediary (the appellant) and a non-intermediary (Topper).

However, given that the legislation did not state that it did not apply in such a circumstance, the tribunal considered that the arrangements between the appellant, Topper and Better were within Reg.6(1)(c) of the 2000 Regulations.

(2) Having considered all the relevant factors the tribunal was satisfied that, if S had been employed by Better, he would have been regarded as being employed in employed earner's employment.

(3) It was inappropriate for the tribunal to entertain the appellant's argument as to (iii), since the decisions under appeal had not been made under the 1978 Regulations and that argument concerned both Topper and S, neither of whom was a party to the appeal.

Appeal dismissed.


John Antell for the appellant. I B Mitchell (advocacy advisor) of the London Region Advocacy Unit for the respondent.

LTL 18/2/2002 (Unreported elsewhere)

Document No. AC0700386

Source: Lawtel http://www.lawtel.co.uk , copyright acknowledged.