Paya Ltd and Another
| Jurisdiction | UK Non-devolved |
| Judgment Date | 29 September 2016 |
| Neutral Citation | [2016] UKFTT 660 (TC) |
| Date | 29 September 2016 |
| Court | First Tier Tribunal (Tax Chamber) |
Judge Anne Redston
Mr Jonathan Peacock QC, Ms Marika Lemos and Ms Georgia Hicks, instructed by David Kirk & Co, Chartered Accountants and Chartered Tax Advisers, appeared for the appellants
Mr Adam Tolley QC and Mr Christopher Stone, instructed by the General Counsel and Solicitor to HM Revenue and Customs, appeared for the respondents
Mr Michael Furness QC and Ms Hui Ling McCarthy, instructed by the BBC Litigation Department
Procedure – Application by a non-party to the proceedings to provide witness evidence – Whether the tribunal has the jurisdiction to allow the application – Whether the tribunal has an adversarial jurisdiction or an inquisitorial jurisdiction – Whether analogous with Employment Tribunal – Jurisdiction of Social Entitlement Chamber and Immigration and Asylum Chamber considered – If the tribunal has the jurisdiction to allow an application by a non-party to provide evidence – Whether the BBC's application should be allowed – Whether a non-party has appeal rights.
This was an application by the BBC to submit witness information and exchange information in an “IR35” case. The court found that it did not have jurisdiction to allow a person who is not party to the proceedings to submit evidence in its own motion.
Paya Ltd and Tim Willcox Ltd (“the appellants”) are the personal service companies (“PSC's”) of BBC presenters. The appellants were assessed to income tax and National Insurance Contributions (“NICs”) under the Income Tax (Earnings and Pensions) Act 2003 (“ITEPA 2003”), Pt. 2, Ch. 8 and the Social Security (Intermediaries) Regulations 2000, together commonly known as the “IR35” provisions. By directions given on 8 May 2015, the appellants' appeals were joined.
This hearing was listed to deal with three applications:
1) an application by the BBC to submit witness evidence other than as a party to the proceedings (“the BBC application”);
2) an application by the appellants for the parties' exchange of witness evidence to be postponed until after the tribunal had considered and determined the BBC application. The parties had proceeded on the basis that this application would be allowed, and the court gave consent; and
3) an application by the appellants for specific disclosure from HMRC. However, the evening before the hearing, HMRC offered to provide the appellants with certain information and documents on a voluntary basis; the appellants then withdrew their application.
The hearing therefore dealt only with the BBC application.
The substantive issue is whether IR35 applies to the engagements between the appellants and the BBC. Both HMRC and the appellants therefore anticipated calling witnesses who were current or former employees of the BBC (“BBC witnesses”).
By direction 12 of the tribunal's directions, as amended, the parties were to exchange witness statements on 27 January 2016. The BBC application was made two days before that deadline.
The BBC application asked the tribunal to direct that evidence from BBC witnesses be prepared and submitted to the tribunal by the BBC's legal team and not by the parties. The BBC would retain control over the evidence given by BBC witnesses, who might include individuals called by neither party.
The BBC application attached the following draft directions, which the court was invited to agree:
1) that the parties should attempt to agree the identity of the BBC witnesses, the issues they should address and which documents should be made available to them. This process includes the BBC confirming whether or to what extent the BBC witnesses are willing to give the evidence requested;
2) that the BBC's legal team should be provided with copies (at its cost) of all relevant documents (to include the appellants' grounds of appeal, HMRC's statement of case, any witness statements exchanged by the parties and any other documents on which the BBC witnesses are likely to be cross-examined), together with either an agreed list of questions/issues or separate lists from each party;
3) that the parties should be given an opportunity to comment on drafts of the BBC witness statements;
4) that the BBC witness statements should be submitted by the BBC to the tribunal rather than by either party; and
5) the BBC witnesses should be available to be cross-examined by either party.
HMRC and the appellants objected to the BBC application.
The court was also asked to consider two variations to the BBC application:
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1) The BBC variation, under which witnesses would provide evidence in the form of “information” contained in “documents”; these would be filed with the tribunal and served on the parties; the tribunal or either party could then, if it chose to do so, call those witnesses to be cross-examined. Mr Furness asked the court to consider the BBC variation only if it had first rejected the BBC application.
The appellants and HMRC objected to the BBC variation.
2) The appellants put forward a different variation to the BBC application, (“the appellants' variation”), which is set out at para. 289. HMRC objected to the appellants' variation.
It was common ground that there were four issues to be decided:
1) whether the tribunal has the jurisdiction to allow an application to provide witness evidence, when that application is made by a non-party of its own motion, in other words, not at the request of the parties or at the initiative of the tribunal; and
2) if the answer to that question is yes, whether the tribunal should allow the BBC application as originally made; or, in the alternative
3) whether the tribunal should allow the BBC variation or the appellants' variation; and
4) what directions should be given by the tribunal in the light of its decision(s) on the above issues.
The decision on issue 1 is that the tribunal does not have the jurisdiction to allow a person who is not a party to the proceedings to submit evidence to the tribunal of its own motion. In summary, this is because:
1) the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 (“the Tribunal Rules”) contain no provision explicitly giving the tribunal that jurisdiction;
2) r. 2(2)(b) of the Tribunal Rules requires the tribunal to avoid unnecessary formality and seek flexibility in the proceedings, but does not allow the tribunal to step outside the rules altogether;
3) although r. 5(1) gives the tribunal power to regulate its own procedure, that power is not unlimited; in particular, the tribunal cannot act in a way which is inconsistent with its jurisdiction, which is adversarial in nature; and
4) the tribunal has no power to issue a costs order against a non-party, and has no sanctions at all against a person in the position of the BBC. That is consistent with the tribunal having no jurisdiction to allow a non-party to intervene in the proceedings.
The court gave its decision on issue 2 orally at the end of the hearing and refused the variations. The tribunal had the relevant jurisdiction, the BBC application was refused. In this decision notice the court set out its reasons for that decision.
In summary, the procedure set out in the BBC application would undermine the parties' freedom to put forward their cases to the tribunal. This would be unfair and unjust, and a breach of the overriding objective. Furthermore, the court did not agree with any of the BBC's reasons as to why such a radical change to the giving of evidence was required.
This case highlights the tribunal's lack of jurisdiction to allow a non-party to provide witness evidence.
[1] Paya Limited and Tim Willcox Limited (“the Appellants”) are the personal service companies (“PSCs”) of BBC presenters. The Appellants were assessed to income tax and National Insurance Contributions (“NICs”) under Part 2, Chapter 8 of the Income Tax (Earnings and Pensions) Act 2003 (“ITEPA”) and the Social Security (Intermediaries) Regulations 2000, together commonly known as the “IR35” provisions. By directions given on 8 May 2015, the Appellants' appeals were joined.
[2] This hearing was listed to deal with three applications:
1) an application by the BBC to submit witness evidence other than as a party to the proceedings (“the BBC Application”);
2) an application by the Appellants for the parties' exchange of witness evidence to be postponed until after the Tribunal had considered and determined the BBC Application. The parties had proceeded on the basis that this application would be allowed, and I gave consent; and
3) an application by the Appellants for specific disclosure from HMRC. However, the evening before the hearing, HMRC offered to provide the Appellants with certain information and documents on a voluntary basis; the Appellants then withdrew their application.
[3] The hearing therefore dealt only with the BBC Application.
[4] The substantive issue is whether IR35 applies to the engagements between the Appellants and the BBC. Both HMRC and the Appellants therefore anticipated calling witnesses who were current or former employees of the BBC (“BBC witnesses”).
[5] By direction 12 of the Tribunal's directions, as amended, the parties were to exchange witness statements on 27 January 2016. The BBC Application was made two days before that deadline.
[6] The BBC Application asked the Tribunal to direct that evidence from BBC witnesses be prepared and submitted to the Tribunal by the BBC's legal team and not by the parties. The BBC would retain control over the evidence given by BBC witnesses, who might include individuals called by neither party.
[7] The BBC Application attached the following draft directions, which I was invited to agree:
1) that the parties should attempt to agree the identity of the BBC witnesses, the issues they should address and which documents should be made available to them. This process includes the BBC confirming whether or to what...
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Christa Ackroyd Media Ltd
...albeit they are not of course binding on us. He referred us to Lewis (t/a MAL Scaffolding) v R & C Commrs (2006) Sp C 527, Paya Ltd [2016] TC 05386 and Tomlinson [2017] TC 05943. Paya Ltd was a similar case to the present involving BBC presenters but the decision concerned a procedural poin......