THE COMMISSIONERS FOR HIS MAJESTY’S REVENUE AND CUSTOMS v RALC CONSULTING LIMITED [2024] UKUT 00099 (TCC)
| Jurisdiction | UK Non-devolved |
| Judge | Mr Justice Richards,Judge Ashley Greenbank |
| Court | Upper Tribunal (Tax and Chancery Chamber) |
| Published date | 15 April 2024 |
Neutral Citation: [2024] UKUT 00099 (TCC) Case Number: UT/2020/000377
UPPER TRIBUNAL
(Tax and Chancery Chamber) Rolls Building, Fetter Lane,
London, EC4A 1NL
INCOME TAX – NATIONAL INSURANCE CONTRIBUTIONS – intermediaries legislation –
sections 48 to 61 Income Tax (Earnings and Pensions) Act 2003 – Social Security
Contributions (Intermediaries) Regulations 2000 – whether First-tier Tribunal erred in failing
properly to construct hypothetical contract – yes – whether First-tier Tribunal erred in its
application of the test of mutuality of obligation to the hypothetical contract – yes – appeal
allowed – decision set aside and case remitted to First-tier Tribunal
Heard on: 14 and 15 December 2023
Judgment date: 12 April 2024
Before
MR JUSTICE RICHARDS
JUDGE ASHLEY GREENBANK
Between
THE COMMISSIONERS FOR HIS MAJESTY’S REVENUE AND CUSTOMS
Appellants
and
RALC CONSULTING LIMITED Respondent
Representation:
For the Appellants: Christopher Stone, counsel, and Marianne Tutin, counsel, instructed by
the General Counsel and Solicitor to His Majesty’s Revenue and
Customs
For the Respondent: Michael Paulin, counsel, instructed by Tax Networks Ltd.
1
DECISION
INTRODUCTION
1. This is an appeal by the appellants, the Commissioners for His Majesty’s Revenue and
Customs (“HMRC”), against a decision of the First-tier Tribunal (the “FTT”) dated 3 March
2020 (the “Decision”).
2. In the Decision
1
, the FTT allowed the appeal of the respondent, RALC Consulting
Limited (“RALC”), against a decision of HMRC to issue notices of decision and
determinations charging RALC to income tax and national insurance contributions (“NICs”)
under the “intermediaries legislation” (commonly known as IR35), which is found in sections
48 to 61 of the Income Tax (Earnings and Pensions) Act 2003 (“ITEPA”) and the Social
Security Contributions (Intermediaries) Regulations 2000 (the “SSCI Regulations”).
3. The various notices of decision and determinations relate to the tax years 2010/11 to
2014/15. The amounts of income tax and NICs (excluding interest) at issue are £164,482
and £78,842 respectively.
4. HMRC appeals to this tribunal with the permission of the FTT.
BACKGROUND
5. We will need to approach the findings of fact as made by the FTT in more detail later in
this decision. However, to set the scene, we will first describe the factual backdrop to this
dispute, none of which, we understand, is in dispute.
6. RALC is the personal service company of Mr Richard Alcock, an IT consultant. At all
material times, Mr Alcock was the sole director of, and the sole shareholder in, RALC.
7. During the relevant tax years, RALC provided the services of Mr Alcock for fixed
periods of time under three sets of contractual arrangements that are relevant to this appeal.
In each case, there were four parties to the chain of contracts: Mr Alcock, RALC, an agency,
and the “end client”. The end client in the case of two of the sets of contractual arrangements
was Accenture (UK) Limited (“Accenture”), a management consultancy and professional
services firm. The end client in the other case was the Department for Work and Pensions
(“DWP”). The agency for the engagements with Accenture was Networkers Recruitment
Services Limited (“Networkers”) and the agency for the engagement with DWP was Capita
Resourcing Limited (“Capita”).
8. In all cases, the contractual arrangements involved: an agreement between RALC and
the agency, to which the parties, and the FTT in the Decision, referred as the “lower level
contract” or “LLC”; and a further agreement between the agency and the end client, to which
the parties and the FTT in the Decision, referred as the “upper level contract” or “ULC”. We
have adopted the same terminology in this decision notice. There must also have been a
further contract, between RALC and Mr Alcock, though the FTT made no findings as to the
terms of that contract, no doubt because it proceeded on the basis that RALC could safely be
viewed as an alter ego of Mr Alcock. No-one has suggested to us that the terms of any
contract between Mr Alcock and RALC are significant.
1
In this decision notice, we refer to paragraphs in the Decision in the format “FTT [xx]”.
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