SYNAPTEK LTD v GRAEME YOUNG (HMIT) (2003)

Ch D (Hart J) 27/2/2003

TAX - CIVIL PROCEDURE - COMMERCIAL LAW - EMPLOYMENT

APPLICATIONS FOR CASE TO REMITTED TO GENERAL COMMISSIONERS : DISCRETION : FURTHER FINDINGS OF FACT : APPEALS BY WAY OF CASE STATED : S.56 TAXES MANAGEMENT ACT 1970 : INADEQUATE STATEMENT OF CASE : INADEQUATE FINDINGS OF FACT : IR35 LEGISLATION : FINANCE ACT 2000 : PERSONAL SERVICE COMPANIES : INCOME TAX AND NATIONAL INSURANCE CONTRIBUTIONS CHARGED ON FEES PAID BY CLIENT : ARRANGEMENTS EQUIVALENT TO EMPLOYER/EMPLOYEE RELATIONSHIP : REG.6(1) SOCIAL SECURITY CONTRIBUTIONS (INTERMEDIARIES) REGULATIONS 2000 : S.4A SOCIAL SECURITY CONTRIBUTIONS AND BENEFITS ACT 1992 : S.75 WELFARE REFORM AND PENSIONS ACT 1999

In an appeal by way of case stated from a decision of the General Commissioners dismissing the appellant's appeal from the Inland Revenue that the circumstances of arrangements between an individual providing services to a company through a personal services company were such that had they taken the form of a contract between the individual and the company then the individual would be regarded as employed by the company, the court stood over the appellant's application to remit the case for further findings of fact pending determination of the appeal.

Synaptek's ('S') application for its case to be remitted to the General Commissioners ('the commissioners') for the commissioners further findings.

If successful, S's appeal by way of case stated from a decision of the commissioners dismissing S's appeal from a decision of the Inland Revenue ('the revenue') of 30 April 2001 would have to be adjourned.

Gordon Stutchbury ('G') was a software engineer employed by S, which provided G's services to clients, including the Government's IT Services Agency ('ITSA') and a company known as EDS.

The revenue decided that the circumstances of the arrangement between G and EDS for the performance of services from 1 May 2000 to 29 October 2000 were such that they had taken the form of a contract between G and EDS, so that G would be regarded as employed by EDS.

S's appeal to the commissioners was dismissed.

S's grounds for remission were: (i) the decision that was under appeal was to the effect that G was to be regarded as employed by EDS from 1 May 2000 to 29 October 2000.

The commissioners entirely overlooked the undisputed evidence before them that the relationship between S and EDS commenced only on 1 September 2000, prior to which ITSA had fulfilled EDS' role; and (ii) the case stated contained inadequate findings of fact concerning arguments to be adduced on appeal on the substantive issues, such that it would be difficult for a court properly to consider the issues of law.



HELD: (1) The respondent, ('HMIT') accepted that G's services were provided to ITSA under relevant arrangements from 1 May to 30 September 2000 when ITSA's work was transferred to EDS and therefore there was a seamless transition as to the work carried out by G.

Accordingly, it was unnecessary to remit the case to the commissioners in order to enable them to make a finding to that effect.

The argument on appeal could proceed on the basis that the relevant transfer of transactions did take place on 30 October.

The consequences of that were a matter for argument.

(2) The authorities indicated that the nub of the matter was the question whether a particular contract was a contract of service or for services, which question warranted careful analysis and fine distinctions, Hall v Lorimer (1994) STC 23 considered.

S's criticisms of the commissioners' findings of fact could be grouped into three categories: (i) facts that one could see from the case stated were alleged before the commissioners and where it was possible to interpret their decision as having accepted the correctness of the fact alleged.

It was possible to interpret the commissioners' decision as having broadly accepted the factual allegations.

The commissioners only found it necessary to distil from those allegations broad conclusions as found in the findings of fact; (ii) allegations of fact where it was not clear whether the commissioners accepted the factual allegations and such was not reflected in their findings.

Here, the court could not decide whether S's points were good or not and therefore the question of remission had to be decided once the court had decided the questions of constructions raised by S; (iii) matters on which there was evidence before the commissioners but was not expressed or recorded as contentions and no explicit findings of fact had been made.

It was not appropriate to remit the case to the commissioners for specific findings as to whether or not they had accepted such evidence and if so what significance was attached to it.

Such points amounted to "nit-picking" as per Scott J in Consolidated Goldfields plc v IRC (1990) STC 356.

(3) The court could understand S's dissatisfaction with the way in which the commissioners had expressed their findings.

It was difficult, simply reading the findings and the conclusion to understand on a first reading without looking at the underlying legal materials entirely, to follow their reasoning.

Such difficulty was exacerbated by the relatively exiguous nature of the findings made.

It might be that a court would reach the conclusion that the commissioners' findings were to slender to permit any rational conclusion.

However, this court had not reached that stage yet.

The application to remit would not be dismissed as it depended on the conclusion the court might reach on the question of construction.

Application stood over pending determination of appeal.


Conrad McDonnell instructed by Bond Pearce for S. Clive Sheldon instructed by the Treasury Solicitor for HMIT.

LTL 27/2/2003 EXTEMPORE (Unreported elsewhere)

Document No. AC9200496

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