Laing O'Rourke v The Commissioners for Her Majesty's Revenue & Customs, TC 08161
| Jurisdiction | UK Non-devolved |
| Court | First-tier Tribunal (Tax Chamber) |
| Judge | Tracey Bowler |
| Judgment Date | 08 June 2021 |
| Neutral Citation | [2021] UKFTT 0211 |
| Reference | TC 08161 |
| Appellant | Laing O'Rourke |
| Respondent | The Commissioners for Her Majesty's Revenue & Customs |
FIRST-TIER TRIBUNAL
TAX CHAMBER
Appeal number: TC/2019/03733
BETWEEN
LAING O’ROURKE SERVICES LTD
Appellant
-and-
THE COMMISSIONERS FOR
HER MAJESTY’S REVENUE AND CUSTOMS
Respondents
TRIBUNAL:
JUDGE TRACEY BOWLER
The hearing took place on 23-25 February 2021. With the consent of the parties, the form
of the hearing was V (video) using the Tribunal video platform. A face to face hearing
was not held because of the circumstances of the pandemic.
Prior notice of the hearing had been published on the gov.uk website, with information
about how representatives of the media or members of the public could apply to join the
hearing remotely in order to observe the proceedings. As such, the hearing was held in
public.
Mr Jolyon Maugham QC and Ms Georgia Hicks, instructed by Deloitte LLP for the
Appellant.
Mr Akash Nawbatt QC and Mr Joshua Carey, instructed by the General Counsel and
Solicitor to HM Revenue and Customs, for the Respondents.
[2021] UKFTT 0211 (TC)
TC08161
NICs – whether payments to employees who chose a cash allowance instead of a company
car on the basis that they would use a non-company car meeting stated requirements for
business use were “earnings” - yes – application of Owen v Pook and Donnelly v Williamson
- is the disregard of “qualifying amounts” limited to payments of relevant motoring
expenditure – yes – were the payments relevant motoring expenditure – no.
1
DECISION
INTRODUCTION
1. The Appellant (“LOR”) appeals against the decisions issued by the Respondent
(“HMRC”) under section 8 Social Security Contributions (Transfer of Functions, etc.) Act
1999 that LOR paid the correct amount of primary and secondary National Insurance
Contributions (“NICs”) on payments made to employees in the period from 2004/2005 to
2017/2018 under a car allowance scheme (“the Scheme”) and was not entitled to any refund of
the NICs. In essence, the Scheme allowed employees who were entitled to receive a company
car the choice of payments under the Scheme (“the Payments”) instead of the company car,
provided that the employee had a car available for use which met specified requirements.
2. In summary, LOR claimed that an amount of the Payments falls within what regulation
22A of, and paragraph 7A of Part VIII of Schedule 3 to, the Social Security (Contributions)
Regulations 2001 (“the 2001 Regulations”) refer to as the “Qualifying Amount” (“QA”) and,
as a result, should not be subject to NICs. HMRC say that QA is limited to payments of
“relevant motoring expenditure” (“RME”) defined in regulation 22A and the Payments were
not RME. LOR say that if the QA disregard for NICs is limited to payments of RME that
disregard still applies as the Payments are RME.
3. Alternatively, LOR say that the Payments were not “earnings” for the purposes of NICs.
4. The quantum of the claim has not yet been determined and is not a matter for this
decision. The parties have agreed that if LOR succeeds in its appeal, the quantum will then be
addressed by them.
BACKGROUND
5. On 29 November 2010 the Appellant wrote to the Respondents attaching a protective
claim for a reimbursement of Secondary NICs on payments made to employees for the use of
employee-owned vehicles from 2004 – 2010 inclusive following the decision of First-tier
Tribunal in Cheshire Employer and Sills Development Limited (previously Total People
Limited) -v- The Commissioners for HM Revenue and Customs [2010] UKFTT 379 (TC).
6. Correspondence between HMRC and LOR followed and in a letter dated 31 July 2018
LOR sought to extend the claim for a refund to later years.
7. It was agreed between the parties that a representative sample of employees would be
chosen for decisions to be made by HMRC under Section 8 Social Security Contributions
(Transfer of Functions, Etc) Act 1999 (“Section 8”).
8. On 18 April 2019 HMRC issued 17 decisions to a sample of LOR employees under
Section 8 declining to refund NICs paid in relation to Payments made during the tax years
2004/2005 to 2017/2018.
9. On 16 May 2019 LOR wrote to HMRC and sought to appeal against the section 8
decisions. It was noted that the appeal was in respect of the entirety of its population of earners
in respect of which protective refund claims were made.
10. On 19 August 2019 HMRC wrote to LOR and confirmed that their view of the matter
was set out in the correspondence dated 18 April 2019.
11. On 29 August 2019 HMRC issued a review conclusion letter to LOR, confirming the
decisions made on 18 April 2019.
12. A Notice of Appeal was submitted to the Tribunal on 24 September 2019 in which LOR
seeks repayment of £2,228,892.04 of NICs, although as stated above quantum is yet to be
determined.
2
13. LOR’s appeal has been designated as a lead case under rule 18 of the First-Tier Tribunal
Procedure Rules and the appeal of one other appellant is stayed behind this appeal. On 9
December 2020 an application by HMRC to stay the appeals of three other appellants behind
this appeal was refused by the Tribunal.
THE EVIDENCE
14. The evidence consists of a bundle running to 523 pages, separate spreadsheet exhibits
attached to the Witness Statement of Mr Waller and the oral evidence of Mr Waller, who is the
Head of Fleet at LOR. There are also two separate HMRC spreadsheets considering business
mileage, which were amended during the hearing to reflect updated information about business
mileage of LOR employees using fuel cards as well as information from separate claims for
business mileage fuel payments.
15. Some of the spreadsheets provide evidence about all of the employees taking part in the
Scheme; for example, identifying all of the job descriptions of those eligible for the Scheme,
or showing the percentage of employees in the Scheme driving more than 20,000 business
miles or driving zero business miles. Some only provide details such as business mileage for
the employees to whom the Section 8 notices were issued. Some provide analysis of the
Payments made to, and business mileage driven by, a representative sample of participants in
the Scheme. One spreadsheet sets out the amounts taken into account by Mr Waller in a review
of the Scheme in 2019.
THE BURDEN OF PROOF
16. LOR bears the burden of proof. The usual civil standard of balance of probabilities
applies.
STRUCTURE OF THIS DECISION
17. There were two distinct areas of this case on which Mr Nawbatt and Mr Maugham made
extensive submissions: the approach to the evidence and, in particular, the evidence of Mr
Waller; and the substantive issues. I have set out this decision as follows:
(1) Addressing the submissions made about, and deciding the correct approach to, the
evidence and making findings of fact;
(2) Addressing the submissions made about, and deciding the correct approach to, the
application of the law to those facts.
18. More than two days were taken up with submissions from Mr Nawbatt and Mr Maugham.
For the sake of brevity I only record the main points made by them in this decision.
FINDINGS OF FACT AND REASONS FOR THE FINDINGS
HMRC’s submissions about the evidence
19. Mr Nawbatt submits that it is unclear how LOR can say that Mr Waller is the best placed
person to act as witness. He does not work within the Department who are ultimately
responsible for the Scheme and says that he has only been involved “more recently” in
assessing it. He had not been asked to look at it before 2016. However, the 2016 and 2017
reviews were not mentioned in his Witness Statement, no documents relating thereto have been
produced and these reviews were raised for the first time in oral evidence at the hearing. The
spreadsheet provide by him explaining the review in 2019, entitled “car versus car allowance
comparison”, and listing various costs of owning and running a car, had only been produced
after the appeal years. This evidence therefore should not be treated as showing the design of
the Scheme despite Mr Waller’s statements in his Witness Statement to that effect.
20. Mr Waller has no personal knowledge of when the Scheme was first introduced, how it
was designed, or when the rates were set or how they were calculated. Mr Nawbatt submits
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