LAING O’ROURKE SERVICES LIMITED v THE COMMISSIONERS FOR HIS MAJESTY’S REVENUE AND CUSTOMS & THE COMMISSIONERS FOR HIS MAJESTY’S REVENUE AND CUSTOMS v WILLMOTT DIXON HOLDINGS LIMITED [2023] UKUT 00155 (TCC)
| Jurisdiction | UK Non-devolved |
| Judge | Mr Justice Michael Green,Judge Jonathan Cannan |
| Subject Matter | 10 July 2023 |
| Court | Upper Tribunal (Tax and Chancery Chamber) |
| Published date | 10 July 2023 |
UT Neutral citation number: [2023] UKUT 00155 (TCC) Case Numbers: UT/2021/000196
UT/2022/000035
UPPER TRIBUNAL
(Tax and Chancery Chamber) Hearing venue: Rolls Building
Fetter Lane
London
EC4A 1NL
Heard on: 22-24 March 2023
Judgment date: 10 July 2023
National insurance contributions – earnings – car allowances – whether disregarded as earnings
pursuant to paragraph 7A Part VIII Schedule 3 Social Security (Contributions) Regulations 2001 –
meaning of Qualifying Amount and Relevant Motoring Expenditure in regulation 22A
Before
The Honourable Mr Justice Michael Green
Judge Jonathan Cannan
Between
LAING O’ROURKE SERVICES LIMITED Appellant
and
THE COMMISSIONERS FOR HIS MAJESTY’S
REVENUE AND CUSTOMS Respondents/Appellants
and
WILLMOTT DIXON HOLDINGS LIMITED Respondent
Representation:
For the Appellant: Jolyon Maugham KC and Georgia Hicks of counsel, instructed by Deloitte LLP
For the Respondents/Appellant: Akash Nawbatt KC and Joshua Carey of counsel, instructed by the
General Counsel and Solicitor for His Majesty’s Revenue and Customs
For the Respondent: Rory Mullan KC, instructed by Innovation Professional Services Limited
2
DECISION
Introduction
These two appeals were heard together because they raise similar issues as to liability for Class 1
National Insurance Contributions (“NICs”) on the payment of certain car allowances to employees.
In the first appeal, Laing O’Rourke Services Limited (“Laing”) appeals a decision of the First-
tier Tribunal (“the FTT”) released on 8 June 2021 ([2021] UKFTT 0211 (TC)). The FTT dismissed
Laing’s appeal against HMRC’s decision that Laing was not entitled to repayment of NICs paid in
relation to car allowances in the tax years 2004-05 to 2017-18. The FTT records that Laing has
claimed repayment of £2,228,892 of NICs.
In the second appeal, HMRC appeal a decision of the FTT released on 4 January 2022 ([2022]
UKFTT 00006 (TC)). The FTT allowed the appeal of Willmott Dixon Holdings Limited (“Willmott”)
against HMRC’s decision that Willmott was not entitled to repayment of NICs paid in relation to car
allowances in the tax years 2004-05 to 2014-15. The FTT records that Willmott has claimed
repayment of NICs on a sum of £1,470,056 paid to its employees.
The issues which arise are issues of statutory construction. We describe the relevant legislative
provisions, before explaining the nature of the issues in each appeal.
Relevant legislative provisions
The relevant legislative provisions are set out in an Appendix to this decision. We have included
provisions relating to the income tax treatment of mileage allowances and motoring expenses in the
Income Tax (Earnings and Pensions) Act 2003 (“ITEPA”) which are relevant to the parties’
arguments. The scheme of the NIC provisions may be briefly summarised as follows:
(1) Section 3 of the Social Security Contributions and Benefits Act 1992 (“SSCBA 1992”)
provides that “earnings” on which NICs are payable includes any remuneration or profit derived
from an employment. The amount of an employee’s earnings is to be calculated in accordance
with regulations. We are principally concerned with the Social Security (Contributions)
Regulations 2001 (“the 2001 Regulations”)
(2) Regulation 22A of the 2001 Regulations (“regulation 22A”) provides for certain amounts
which would not otherwise be earnings to be treated as earnings in connection with the use of
qualifying vehicles, which include cars. The amount is identified by reference to the formula
RME – QA, where RME is the “relevant motoring expenditure” and QA is the “qualifying
amount”. RME is calculated in accordance with regulation 22A(3) and includes certain mileage
allowances and other payments. QA is calculated in accordance with regulation 22A(4) by
reference to the number of business miles travelled by the employee at a specified rate per mile.
(3) Regulation 25 of the 2001 Regulations provides that certain payments specified in Schedule
3 are to be disregarded in calculating earnings. We are concerned in particular with paragraph
7A in Part VIII of Schedule 3 (“paragraph 7A”) which disregards “the qualifying amount
calculated in accordance with regulation 22A(4)”. We are also concerned with the disregards
appearing in paragraphs 3 and 9.
The key provisions in relation to these appeals are regulation 22A and paragraph 7A. The
principal issues concern the construction of those provisions and their history is relevant. Regulation
22A and paragraph 7A were introduced with effect from 6 April 2002. The background to those
changes is helpfully summarised in the judgment of Etherton LJ, as he then was, in Cheshire
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