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You are here: BAILII >> Databases >> United Kingdom Special Commissioners of Income Tax Decisions >> London Recruitment Services Ltd v Revenue & Customs [2006] UKSPC SPC00546 (07 June 2006) URL: http://www.bailii.org/uk/cases/UKSPC/2006/SPC00546.html Cite as: [2006] UKSPC SPC546, [2006] UKSPC SPC00546 |
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London Recruitment Services Ltd v Revenue & Customs [2006] UKSPC SPC00546 (07 June 2006)
SPC00546
CONSTRUCTION INDUSTRY CERTIFICATES - Preliminary issue being an appeal against Assessments under Regulation 14 of IT (Sub-contractors in the Construction Industry) Regs 1993 SI 1993/743 - Appeal dependent on whether Appellant's contract for the supply of workers to it was a contract simply with one counter-party sub-contractor (which held a CIS 6 Certificate) or whether that sub-contractor was itself contracting as agent for numerous "employing companies" none of which held such certificates - Appeal allowed on the preliminary issue
LONDON RECRUITMENT SERVICES LTD Appellant
- and –
Sitting in public in London on 24, 25, and 26 April and 8 and 9 May 2006
Giles Goodfellow Q.C. , counsel for the Appellants
Tim Eicke, counsel for the Respondents
INTRODUCTION
THE DIFFERENT BUSINESS ROLES.
THE RELEVANT CONSTRUCTION INDUSTRY SUB-CONTRACTORS ("CIS") RULES
THE FACTS AND THE DISPUTE IN OUTLINE
THE APPELLANT'S CONTENTIONS ON THE CONTRACTUAL ISSUE
1. the wording of s.599(2) Taxes Act 1988, which required (in nominee situations) certificates to be held by both nominees and the person who nominated them before contractors could make payments without deducting tax only applied if the person nominating the nominee and the nominee had both been identified; and that in this case there had been no identification of any person appointing Europay as its nominee;
2. on the facts, Europay had always been the only counter-party under the contract with LRS and Europay had always acted as principal, with the exception of a few supplies made in November 2004, when Europay began (following the receipt of advice from new advisers) to arrange for a few new employees to be engaged through different companies. LRS itself had been unaware of this change in procedure, and it only occurred very shortly before the operation of all Europay companies ceased following the cancellation of Europay's CIS 6 certificate; and
3. the contract between LRS and Europay had always been an oral contract, this, it was alleged, being fairly normal practice in the circumstances.
THE RESPONDENT'S CONTENTIONS ON THE CONTRACTUAL ISSUE
1. there was a written contract between LRS and Europay;
2. the terms of that contract were those contained in a document that Europay had sent to the HMRC, in the course of raising questions about I.R. 35 issues, that document showing the parties as LRS and Europay, with Europay said to be contracting as agent for various "employing companies", albeit that the document sent to HMRC was not dated or executed by LRS;
3. that when in October 2005, HMRC had asked Mr. Barnett to provide the "Ts & Cs" for LRS's dealings with various of its counter-part composite companies, including Europay, the document that had been sent to HMRC in respect of Eurpay appeared to be the type of contract that would exist between Europay and distinct Europay employing companies if the structure was one under which the employees were employed by various different companies, and Europay's own role was to render administrative services to those companies;
4. that shortly after the formation of Europay, various other companies with numbers after the name "Europay", such as "Europay (1000) Limited" had been formed, and that in pay-roll print outs employees had been given reference numbers that corresponded to these company names and numbers, followed by a letter, for instance "1000F", perhaps indicating that the particular employee was employed by Europay (1000) Limited, and that he held a share designated as the F share in that company; and
5. that the "starter-pack documentation" provided by Europay to new employees periodically suggested that there were distinct employing companies, and that it was not the case that all workers would be employed solely by Europay itself.
EVIDENCE
OUR DECISION
SC 3036/2006