Pertemps Recruitment Partnership Ltd v HMRC
| Jurisdiction | UK Non-devolved |
| Judge | The Hon Mr Justice Arnold |
| Judgment Date | 11 March 2011 |
| Neutral Citation | [2011] UKUT 272 (TCC) |
| Respondent | MAJESTY’S REVENUE AND CUSTOMS |
| Appellant | Jonathan Schwarz, instructed by Grant Thornton UK LLP, for the |
| Court | Upper Tribunal (Tax and Chancery Chamber) |
| Appeal Number | FTC/65/2010 |
[2011] UKUT 272 (TCC)
Appeal number
FTC/65/2010
Corporation Tax – mistaken payments by taxpayer’s customers – whether arising or
accruing from trade
UPPER TRIBUNAL
TAX AND CHANCERY CHAMBER
PERTEMPS RECRUIMENT PARTNERSHIP
LIMITED
Appellant
- and –
THE COMMISSIONERS FOR HER
MAJESTY’S REVENUE AND CUSTOMS Respondents
Tribunal: The Hon Mr Justice Arnold
Sitting in public in London on 1 and 2 March 2011
Jonathan Schwarz, instructed by Grant Thornton UK LLP, for the Appellant
Elizabeth Wilson, instructed by HMRC Solicitors’ Office, for the Respondents
© CROWN COPYRIGHT 2010
[2011] UKUT 272 (TCC)
MR JUSTICE ARNOLD:
Introduction
1. This is an appeal by Pertemps Recruitment Partnership Ltd (“Pertemps”) from
a decision of Tribunal Judge Nicholas Aleksander and Mr Philip Gillett sitting
in the First-Tier Tribunal (Tax Chamber) (“the Tribunal”) dated 13 May 2010
[2010] UKFTT 218 (TC) by which the Tribunal dismissed Pertemps’ appeal
against (a) the refusal by the Respondents (“HMRC”) of error and mistake
claims made by Pertemps pursuant to Schedule 18, paragraph 51 of the
Finance Act 1998 for each of the accounting periods ended 31 December
1999, 2000, 2001 and 2002, and (b) an amendment to Pertemps’ corporation
tax return for the accounting period ended 31 December 2003 pursuant to
Schedule 18, paragraph 34(4) of the Finance Act 1998.
2. The issue raised by the appeal is whether sums paid by Pertemps’ customers to
Pertemps by mistake form part of the “profits or gains arising or accruing …
from [Pertemps’] trade” within section 18(1)(a)(ii) of the Income and
Corporation Taxes Act 1988, so as to be subject to corporation tax.
The facts
3. The facts, which were largely agreed, are set out in detail in the Tribunal’s
decision at [3]-[21]. For the purposes of this appeal they may be summarised
as follows.
4. Pertemps carries on business as a recruitment agency providing either
temporary or permanent workers to its customers. Pertemps customers are
divided into two groups, “contract” customers and “A-Z” customers. Contract
customers enter into negotiated long-term contracts with Pertemps for the
supply of temporary and/or permanent workers. A-Z customers engage
Pertemps to provide workers on its standard terms of business. Relationships
with A-Z customers are often “one off” and last for a short period of time.
5. Customers are invoiced on a regular basis. Customers are contacted promptly
by Pertemps’ credit control department if an invoice is not paid on time.
Where there is a disagreement, for example over the rates charged or the hours
worked, the customer will normally withhold payment either for the full
amount invoiced, or for the disputed amount. Once the disagreement is
resolved (and, where appropriate, a credit note issued), the customer will
normally pay the amount agreed as due.
6. Payments are received by Pertemps either as cheques in the post, or by direct
credit to its bank account by BACS. All payments are made into the same
bank account. At the time when payments are received by Pertemps (either
when the payment is credited directly into its bank account by BACS, or when
a cheque is banked), the payment may not have been reconciled to a particular
invoice, as reconciliation is undertaken separately. Unreconciled payments are
not segregated into a separate account, but are mixed with other receipts.
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Pertemps Recruitment Partnership Limited v The Commissioners for HM Revenue and Customs
...[2011] UKUT 272 (TCC) Appeal number FTC/65/2010 Corporation Tax – mistaken payments by taxpayer’s customers – whether arising or accruing from trade UPPER TRIBUNAL TAX AND CHANCERY CHAMBER PERTEMPS RECRUIMENT PARTNERSHIP LIMITED Appellant - and – THE COMMISSIONERS FOR HER MAJESTY’S REVENUE ......