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First-tier Tribunal (Tax)
You are here: BAILII >> Databases >> First-tier Tribunal (Tax) >> MBF Design Services Ltd v Revenue & Customs  UKFTT 35 (TC) (05 January 2011)
Cite as:  SFTD 383,  UKFTT 35 (TC),  STI 1552
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 UKFTT 35 (TC)
Appeal number TC/2009/13115
Social Security Contributions, employed earner - income tax, employee - independent service provider - services of design engineer - IR35 legislation – hypothetical contract – appeal allowed
MBF DESIGN SERVICES LIMITED Appellant
- and -
TRIBUNAL: Judge Malachy Cornwell-Kelly
Mr Christopher Perry C. Eng.
Sitting in public at Vintry House, Wine Street, Bristol on 15 & 16 November 2010
Mr Matthew Boddington and Ms Nicola Smith of Accountax Consulting for the taxpayer
Mr Colin Williams and Mr David Lewis of Her Majesty’s Revenue and Customs for the Crown
© CROWN COPYRIGHT 2010
1 The appeals before us were made on 9 March 2009 as follows.
2 Firstly, there is an appeal against a notice of decision dated 18 February 2009 issued to MBF Design Services Limited (MBF) under section 8(1)(m) of the Social Security Contributions (Transfer of Functions, etc) Act 1999 and regulation 6(4) of the Social Security Contributions (Intermediaries) Regulations 2000 covering the years 2001-02 to 2006-07. Secondly, there is an appeal against determinations also dated 18 February 2009 issued to MBF under regulation 80 of the Income Tax (Pay As You Earn) Regulations 2003 for the same years.
3 The appeals concern the supply of the design engineering services of the sole director of the taxpayer company (MBF), Mr Mark Fitzpatrick, to Airbus UK Limited (Airbus) through a series of contracts involving MBF, two intermediaries and Airbus. The periods now under appeal are the tax years 2003-04 and 2004-05, and we are invited formally to allow the taxpayer’s appeals in respect of the years 2001-02, 2002-03, 2005-06 and 2006-07.
4 The issue before the tribunal involves applying to the facts of the case the statutory hypothesis, explained further below, which requires us to establish whether, had the arrangements with Airbus taken the form of a contract between Mr Fitzpatrick and Airbus, they would have resulted in his being (i) an employed earner of Airbus for the purpose of National Insurance Contributions and (ii) an employee of Airbus for income tax purposes. The notice and determinations under appeal decided that Mr Fitzpatrick was such an employed earner and employee. It was agreed that for the purposes of this appeal the two tests are not materially different.
5 We find the facts related hereafter to have been proved on the balance of probabilities, except where we indicate in terms that our finding is otherwise.
Facts – the contracts
6 The parties agreed that of the various contracts by which Mr Fitzpatrick’s services were supplied to Airbus, the following might be taken for the purposes of this appeal as representative of each stage in the chain. There were no written contracts between Mr Fitzpatrick and MBF, and no board minutes approving those made by MBF, but we are satisfied that Mr Fitzpatrick was the sole controlling mind of MBF and that its contracts were duly authorised and competent.
7 First, came a contract between MBF and GED-Sitec Limited (GED) dated 23 April 2003 for services to be provided by MBF, through GED, to Airbus. The “Nature of Assignment (Project)”, was described simply as “Designer”. The start date was 28 April 2003, the duration “until 24 October 2003”; two hourly rates were specified: Ł21.47 per hour “for the initial 35 hours per week” and Ł22.34 per hour “for hours above the initial 35 /week”; the notice period was stated to be 7 days.
8 The contract was preceded by a “Request for Services” from GED, which provided that –
“Should the services supplied prove substandard in any way, or the conduct or attendance record give rise to a legitimate claim by our client to withhold payment, we reserve the right in turn to reclaim/withhold the money from [MBF].”
9 Detailed printed conditions formed part of the contract as follows:-
· Mr Fitzpatrick was not named anywhere, but clause 1.1 provided that “ ‘Operatives’ means any person, firm or company engaged by [MBF] or its subcontractors in connection with the project”.
· Clause 2.1 stated that the terms and conditions “contain the entire agreement” between the parties.
· Clause 3.1 required MBF to comply with the Working Time Regulations 1998 and where necessary to obtain any agreements to opt out of the 48 hour working week limit.
· Clause 3.2 provided that MBF “will use its reasonable endeavours to ensure that the Operative(s) work the normal working hours”.
· Clause 3.3 said that GED might on reasonable notice require MBF to “supply the Operative(s) ... for periods of time in excess of the normal working hours” at a fee to be agreed.
· Clause 3.4 provided that the services were to be performed “at such location as [GED] and [MBF] may agree from time to time”.
· Clause 3.5 stated that “[MBF] or the Operative (sic) shall have reasonable autonomy in the provision of the Services, but shall comply with any reasonable request of [GED] or [Airbus] whilst on their premises”.
Clause 5.1 required MBF to “ensure that all Operatives are suitably trained and qualified at the cost of [MBF]”, and clause 5.2 required MBF to “rectify at its own cost any defective work it carries out in relation to the Project”. There was no mention of the nature of the “designer” services to be supplied, or of the level of competence required.
· Clause 7.3 provided for the vesting of all intellectual property rights originated in the performance of the contract in Airbus.
· Clauses 8 and 9 also made it clear that there was no obligation to provide any particular “Operative” and that the Operative provided did not have “any of the statutory or common law rights of an employee”, specifically excluding employee’s common law or statutory rights, illness or holiday pay or protection under the legislation relating to unfair dismissal or redundancy.
· Clause 11 imposed a requirement for GED “and the Personnel” (not specified) to carry insurance against public, employer’s and professional indemnity risks of Ł250,000.
10 The second contract in the chain was dated 24 April 2003 and made between GED and Morson Human Resources Limited (Morson). The client is stated to be Airbus, the fees are Ł23.25 an hour, and the project period is “from 28.04.03 until completion of the Project”, the project itself being described simply as “Airbus”. A special term is that the requirement for professional indemnity insurance in the printed conditions (which would have required GED to carry insurance against public, employer’s and professional indemnity risks) did not apply.
11 The printed conditions define the “Operatives” as “any person firm or company engaged by [GED] or its subcontractors in connection with the Project”. They go on to include the following stipulations:-
· Clause 3.1: neither Morson nor Airbus shall be “entitled to or seek to exercise any supervision, direction or control over [GED] or the Operatives in the manner of performance of the Project.”
· Clause 3.2 required MBF to comply with the Working Time Regulations 1998 and where necessary to obtain any agreements to opt out of the 48 hour working week limit.
· Clause 5 contained requirements for GED to ensure that all Operatives were suitably trained at its own expense, to rectify defective work at its own cost and to ensure that computer equipment used was in good order and virus-protected.
· Clause 6.1.4 enabled the contract to be terminated on 7 days’ notice.
· Clause 7.3 provided for the vesting of all intellectual property rights originated in the performance of the contract in Airbus.
· Clause 8.1: the “relationship of employer and employee” between Morson and GED or the Operatives, or between Airbus and GED or the Operatives, is specifically excluded.
· Clause 8.2 reinforces 8.1, specifically excluding employee’s common law or statutory rights, illness or holiday pay or protection under the legislation relating to unfair dismissal or redundancy.
· Clause 9.1: GED is not obliged to provide the services of any named individual for the project.
· Clause 9.3: GED is free to provide its services and those of the Operatives to any person other than Morson or Airbus.
12 For the third contract taken as typical there are two examples, because their terms are not completely identical. The first example was originally dated 17 September 2003 made between Airbus and Morson, though the copy of this contract is also dated 23 January 2004 under the rubric “date changed”. It is agreed that no point arises on this double dating, which simply indicates that a further contract was being made on the template of the previous one.
13 Whereas the first and second contracts provided only for the services of unnamed ‘operatives’ to be provided, this contract provides for the services of no fewer than 53 named persons, including Mr Fitzpatrick, to be supplied. The contract has clearly been adapted from one normally used for the purchase of goods, and the individuals named are listed beside the headings “quantity” and “net price”. The quantities are specified in hours beside each group of persons, and the net prices are the hourly rates applicable to them.
14 Thus, in the group of 16 persons in which Mr Fitzpatrick’s name appears, the total hours purchased by Airbus is 42,500, and the hourly rate is Ł23.72. There is no distinction as to the hours to be worked or as to the rate per hour between the individuals in the group. Each of the 12 groups listed has a different overall total of hours to be worked and a different hourly rate applicable to its members.
15 The period of the order is stated to be 1 October 2003 to 31 December 2004. The special conditions include:-
“All on-site subcontractors booking to Airbus cost centre EO3 recording hours via the Airbus electronic timesheet process – PMITS.”
“The following time reporting procedure is applicable to this purchase order:
‘On site subcontract time reporting for design work.’
Clause 5 – Inspection Code 5.1(c)
‘[Morson] shall ensure that the order is carried out in conformity with the quality requirements of his Airbus UK approval.’ ”
1) All individuals working ‘on site’ must complete the electronic timesheet on a weekly basis.”
16 The second example of the third contract was again double-dated 13 January and 7 February 2005, and again no point arises on this feature which has the same explanation as before; and as before, the parties are Morson and Airbus. Again, there are schedules of persons whose services are to be supplied, 45 in all. Mr Fitzpatrick appears in two groups: in the first group of 16 persons, he is shown as “resource valid until 28.01.05 (168 hours allocated) requirement transferred to item 8”; in group 8, consisting of four persons, against Mr Fitzpatrick’s name is then noted “resource allocated from 31.01.05 (1,832 hours added) requirement transferred from item 6”. The total hours for group 6 are 30,001 and the “net price” or hourly rate is Ł24.04; for group 8 the figures are 7,712 and Ł25.14 respectively.
17 The period of the order is stated to be 4 January to 31 December 2005. The special conditions are the same as in the first example save that relating the quality requirement, which reads:-
Clause 5 – Inspection Code 5.1(e)
‘No release required – all work undertaken must be checked and approved by Airbus UK staff prior to formal acceptance.’ ”
18 The special conditions in both examples of the third contract also state that “The terms and conditions of this purchase order are detailed within letter Ref: D33/RNC/1852 dated 15th September 2003”; that letter was not shown to us by either party, and not relied on in argument, and we must therefore conclude that it has no relevance to the matter at issue.
19 There were detailed printed conditions relevant to both examples of this contract. The conditions were in two editions dated 2001 and 2005; we were told that there was no material distinction between them in so far as this appeal was concerned. Morson was identified in the contract as “the Supplier”, which was not further defined. The conditions included the following:-
· Clause 4.1 obliged the Supplier to “provide the supplies in all respects in accordance with the Order”.
· Clause 5 dealt with quality conditions.
5.1 stated that “The Supplies shall be subject to whichever of the following Quality Assurance Conditions are specified on the face of the Order-
c) The Supplier shall ensure that the Order is carried out in compliance with the quality requirements of his Airbus UK Limited approval.
(e) Exceptional arrangements determined by the Quality Manager/Chief Inspector and shown on the face of the Order.
· Clause 13.1.3 required any breach capable of remedy to be remedied within 28 days of notice by Airbus at the Supplier’s expense.
· Clause 13.5 stated that the Order might be cancelled by Airbus at any time on written notice (no period was stated), and that while a “fair and reasonable price” was to be paid for all work done, Airbus’s liability was not to exceed “the agreed price”.
· Clause 14 vested all intellectual property created as a result of the work undertaken by the Supplier or its subcontractor in Airbus.
· Clause 16 required the Supplier to effect legal liability insurance of not less than Ł5M if its employees, agents or subcontractors were present on the Airbus site, in respect of loss of or damage to Airbus’s property or death or injury resulting from performance of the Order.
· Clause 17.3 provided that any information given to the Supplier by Airbus should remain the absolute property of Airbus.
· Clause 20 placed the responsibility of complying with statutory and “other” requirements on the Supplier.
· Clauses 2 and 27 provided that the written contract was (a) to supersede any prior agreement between the parties and (b) could only be amended by a signed written document.
Facts – the oral evidence
20 We heard oral evidence from Mr Mark Fitzpatrick; Mr Alan Cooper a former employee of Airbus during the appeal period; Mr Josef Dudman a contractor during the appeal period; and Mr Minh Pham a lead designer employed by Airbus during the appeal period, leading a team of four employed designers and responsible for up to 40 contracted designers – including for a small part of the period Mr Fitzpatrick. Their witness statements had been served beforehand.
21 We regarded these witnesses as straightforward and honest, with the exception of Mr Pham. We did not doubt Mr Pham’s honesty, but he admitted that his witness statement had been prepared for him by HMRC and he had considerable difficulty - due apparently to a limited command of English - in reading it out; and he was hesitant and uncertain in his replies to cross-examination. We were not satisfied that Mr Pham fully understood the contents of his witness statement.
22 After hearing submissions we declined, pursuant to rule 15(2)(b)(iii), to admit unsworn witness statements by two officials of Airbus, Mr Paul Messenger a team leader for most of Mr Fitzpatrick’s time at Airbus, and Mr Steve Hoskins the Head of Product Related Services at Airbus. The statements in question were disputed as to their contents, which related to issues central to the appeal, and the tribunal had given no previous directions that they were to be admitted as they stood without the presence of the witnesses. No witness summonses had been sought for the attendance of the individuals concerned, and in the circumstances it appeared to us to be unfair that these statements should be admitted when they would not be open to challenge by cross-examination, or questioning by the tribunal.
23 The evidence given at the hearing establishes the following facts.
24 Mr Fitzpatrick established MBF in 1996 after the company he had worked for ceased business. Mr Fitzpatrick’s introduction to Airbus was via another contractor who did work for them; initial contact failed to produce a satisfactory outcome, but further negotiations followed and Mr Fitzpatrick was offered a higher rate by the agency involved and (so far as this appeal period was concerned) began work around April 2003. MBF had provided Mr Fitzpatrick’s services to Airbus in earlier periods as well and was registered for VAT.
25 MBF was offered a number of contracts during the appeal period but Mr Fitzpatrick did not consider that it was obliged to accept them: he gave as an example one project in May 2004 where Airbus had requested him to take overall responsibility for the Flight Test Instrumentation for the A380, which Mr Fitzpatrick declined on behalf of MBF because good enough terms were not available. As has been seen in the third level contracts, the periods of each stage of the work and the total resources in hours which Airbus required for it were settled anew at various dates as the project progressed.
26 In practice, there was never any question of providing a substitute for Mr Fitzpatrick (though he asserted that the Morson-Airbus contract entitled the latter to send a substitute for him if they chose). The evidence was that substitution would from Airbus’s point of view have been very difficult to manage, but it would not have been impossible to organise, changing Mr Fitzpatrick’s security clearances and passwords, etc. If Mr Fitzpatrick was absent when work from him was needed, it would either await his return or be done by another designer; if he sent a substitute, a complaint would have been made to the agency because Airbus wanted Mr Fitzpatrick’s services specifically. Airbus would normally want to see and verify the CVs of persons doing work for them.
27 MBF had a history of contracting out Mr Fitzpatrick’s services of the kind featured in this appeal to a number of different clients, including Westland Helicopters, Strachan & Henshaw and Western Design Systems, both before and after the appeal period.
(ii) Work content
28 The work concerned the A380 aircraft and producing acceptable design solutions for components specific to that project. It included incorporating instrumentation devices for measuring and verifying the design specification parameters obtainable from the aircraft, together with routing the data acquisition devices and their connections through the aircraft structure; this enabled the validation of its design for certification by all the relevant aviation authorities worldwide. Mr Fitzpatrick’s activity involved also gathering data on the performance of the aircraft and preparing specifications for the instruments and adapting standardised instruments. Mr Fitzpatrick was entitled to do his own research for this work, and did so both at Airbus and on his own account.
29 Certain design criteria would be offered to Mr Fitzpatrick by Airbus, though often it was up to him to decide what to refer to. It is clear that his work was in principle subject to Airbus approval, but it is also clear that that was so not because of any need to supervise Mr Fitzpatrick’s work as such but because of the need to integrate the work of each contractor in the overall design of the aircraft and to measure it against the requirements of the aviation authorities worldwide, and especially the Civil Aviation Authority in the UK.
30 Thus, both Mr Paul Messenger Mr Fitzpatrick’s team leader or Mr Minh Pham on later occasions, or as occasion required other Airbus officials, did check the work done with a view to ensuring its harmonisation with the rest of the project and its suitability in that context, including its conformity with the technical protocols being used in the project or required by the authorities. It was up to the designer to do the detail of the design. The checking was not therefore primarily for the purpose of quality supervision but more as part of the team leader’s task of co-ordination, not least with other work being done simultaneously.
31 It was explained in this respect that Airbus worked with a system known as ‘concurrent engineering’, in which several designers would be working on related items of design at the same time: as one posted his or her work on the computer system, the others could see to what extent – if any – their own designs needed modifying to fit with what had been done. There was therefore from time to time the need for corrective work to be undertaken by designers such as Mr Fitzpatrick, which they would usually undertake on their own initiative.
32 Reworking due to another designer having altered the landscape in this way would be part of the contract for which Airbus would pay. But if a designer such as Mr Fitzpatrick saw, by contrast, that his work was technically at fault, it would be for him to correct it at his own expense and not as a charge to Airbus; Mr Fitzpatrick had sometimes done so on his own initiative but never at the request of Airbus. If Airbus were dissatisfied with Mr Fitzpatrick’s work, they would discuss the matter with him or, if the problem was serious enough, they would terminate his contract.
33 Naturally, Airbus’s team leaders had the task of co-ordinating the work being done on a particular phase of the project and would give out instructions to the designers, employed or contractors, as to what should be done next or as to the work priorities. Airbus would, as the owner and driver of the project, have the final say as to what should be done and when, but they would not control the precise manner of the work.
34 Mr Fitzpatrick was not subject to the disciplinary or grievance procedures, nor given job appraisals.
35 The location of the work done was usually, but not invariably, Airbus’s premises at Filton, near Bristol. That was both for security reasons and because Mr Fitzpatrick’s services normally involved logging into and using the computer and design facilities of Airbus on site as the aircraft developed. On occasion, however, Mr Fitzpatrick would do research work at home and in his own time.
36 Mr Fitzpatrick did not work set days or hours: he would begin work at any time from 6.30 am to midday and finish up to 6.30 pm to suit himself. Usually, Mr Fitzpatrick took no more than 30 minutes for lunch but at times he took up to two hours; if he had decided to work a short day, Mr Fitzpatrick would then take no lunch break at all.
37 As has been seen from the third level contracts, the keeping of time records by contractors was required. There was a conflict of evidence as to whether the keeping of core hours was an obligatory feature of this in so far as the contractors were concerned, Mr Pham claiming at first that it was; on further consideration, Mr Pham was not sure whether this was actually a contractual requirement or merely “a gentlemen’s agreement” by contractors to fall in line with the hours kept by employees, but he said it was Airbus’s policy that all operatives should be present during core hours.
38 For his part, Mr Fitzpatrick said that he did not know what the core hours were supposed to be and that he came and went when he chose, but that he kept Airbus informed of what he was doing. A timesheet covering 34 weeks of 2005 was in evidence and showed that for this period anyway Mr Fitzpatrick would often work more than the standard 35 hours, in the majority of cases for 40 hours a week or more, and in only five of the 34 weeks did he put in fewer than 35 hours.
39 Our finding on the matter of core hours is that, while the keeping of core hours was strictly speaking a definite requirement by Airbus, the practical outworking of the matter was that the policy was not enforced if effective co-ordination of the contractors’ work with that of the rest of the establishment was achieved. It was thus left to the professional good sense of contractors to ensure that their working practices were sufficiently integrated with those of the staff for the overall operation to continue efficiently, and that we find was the case in Mr Fitzpatrick’s situation.
40 It happened on occasion that the power supply to Airbus’s computers failed and that it was impossible to continue useful work accordingly. In that case, the employees of the company would try and find something to do and make themselves look busy. By contrast, contractors would, as soon as it became clear that the outage was not going to be remedied quickly and that there was nothing else they could be doing, simply be sent home; in this situation, the contractors found themselves stood down and unpaid until the problem was remedied.
41 Mr Fitzpatrick worked alongside Airbus employees and other contractors and while the proportion of one to the other varied, it was mostly about 4 to 5 contractors to one Airbus employee. The security passes issued differentiated between the two classes of persons.
42 MBF issued weekly VAT invoices to GED referable to the number of hours Mr Fitzpatrick had worked in the week. There was no holiday pay or sick pay for Mr Fitzpatrick or his fellow contractors, and they were not in principle invited to the social events organised for Airbus staff or entitled to their various benefits, such as the employee car scheme, the pension scheme, healthcare scheme and so on: there were 25 in all in the list put in evidence. The same applied to occasional benefits, such as Christmas presents or the opportunity for family members to see the A380’s first flight.
43 Airbus would be informed by Mr Fitzpatrick when he was going to take his holidays but, though it was sensible to coordinate the periods in question with Airbus, the latter did not have control as such of Mr Fitzpatrick’s holiday absences; if they did not find his timing acceptable, Airbus were entitled to terminate Mr Fitzpatrick’s involvement with them - he thought on 7 days’ notice (though the Morson/Airbus contract makes it clear that no notice period was specified). Airbus in fact did just that in August 2005, not because of any disagreement over holidays or hours, but because it suited their business interest to do so, giving MBF 4 days’ notice to terminate a contract whose period had commenced less than a month before.
44 Some of the specialist technical training Mr Fitzpatrick needed for this highly specific work was done at Mr Fitzpatrick’s expense and in his own time. Thus, Mr Fitzpatrick did not have formal training in the use of the ‘Primes’ database, which controlled the parts list for the designs and their issue status; he was self-taught in the matter.
45 The same was true in regard to the CATIA version 5 system – a 3D modelling system Airbus introduced to replace an older one; a formal certificate of competence in regard to this was needed. Mr Fitzpatrick could have been trained for CATIA at his own cost on Airbus’s system, but together with others he opted to be trained elsewhere by IBM at a lower cost and at more convenient times.
46 By contrast, Mr Fitzpatrick was trained by Airbus at its expense in the use of the computer-aided design system known as CADD, as Airbus specified the software to be used by the designers.
47 Section 2(1) of the Social Security Contributions and Benefits Act 1992 defines ‘employed earner’ and ‘self-employed earner’ as follows: -
“2 Categories of earners
(1) In this Part of this Act and Parts II to V below—
(a) “employed earner” means a person who is gainfully employed in Great Britain either under a contract of service, or in an office (including elective office) with [general earnings]; and
(b) “self-employed earner” means a person who is gainfully employed in Great Britain otherwise than in employed earner's employment (whether or not he is also employed in such employment).”
48 Section 4A of that Act makes provision in relation to the earnings of workers supplied by service companies: -
“4A Earnings of workers supplied by service companies etc
(1) Regulations may make provision for securing that where—
(a) an individual (“the worker”) personally performs, or is under an obligation personally to perform, services for the purposes of a business carried on by another person (“the client”),
(b) the performance of those services by the worker is (within the meaning of the regulations) referable to arrangements involving a third person (and not referable to any contract between the client and the worker), and
(c) the circumstances are such that, were the services to be performed by the worker under a contract between him and the client, he would be regarded for the purposes of the applicable provisions of this Act as employed in employed earner's employment by the client,
relevant payments or benefits are, to the specified extent, to be treated for those purposes as earnings paid to the worker in respect of an employed earner's employment of his.”
49 The Social Security Contributions (Intermediaries) Regulations 2000, regulations 5 & 6, provided further: -
“5 Meaning of intermediary
(1) In these Regulations “intermediary” means any person, including a partnership or unincorporated association of which the worker is a member—
(a) whose relationship with the worker in any tax year satisfies the conditions specified in paragraph (2), (6), (7) or (8), and
(b) from whom the worker, or an associate of the worker—
(i) receives, directly or indirectly, in that year a payment or benefit that is not chargeable to tax [as employment income under ITEPA 2003], or
(ii) is entitled to receive, or in any circumstances would be entitled to receive, directly or indirectly, in that year any such payment or benefit.
(2) Where the intermediary is a company the conditions are that—
(a) the intermediary is not an associated company of the client, within the meaning of section 416 of the Taxes Act, by reason of the intermediary and the client both being under the control of the worker, or under the control of the worker and another person; and
(i) the worker has a material interest in the intermediary, or
(ii) the payment or benefit is received or receivable by the worker directly from the intermediary, and can reasonably be taken to represent remuneration for services provided by the worker to the client.
(3) A worker is treated as having a material interest in a company for the purposes of paragraph (2)(a) if—
(a) the worker, alone or with one or more associates of his, or
(b) an associate of the worker, with or without other such associates,
has a material interest in the company.
(4) For this purpose a material interest means—
(a) beneficial ownership of, or the ability to control, directly or through the medium of other companies or by any other indirect means, more than 5 per cent of the ordinary share capital of the company; or
(b) possession of, or entitlement to acquire, rights entitling the holder to receive more than 5 per cent of any distributions that may be made by the company; or
(c) where the company is a close company, possession of, or entitlement to acquire, rights that would in the event of the winding up of the company, or in any other circumstances, entitle the holder to receive more than 5 per cent of the assets that would then be available for distribution among the participators.
In sub-paragraph (c) “close company” has the meaning given by sections 414 and 415 of the Taxes Act, and “participator” has the meaning given by section 417(1) of that Act.
6 Provision of services through intermediary
(1) These Regulations apply where—
(a) an individual (“the worker”) personally performs, or is under an obligation personally to perform, services [for another person] (“the client”),
(b) the performance of those services by the worker is carried out, not under a contract directly between the client and the worker, but under arrangements involving an intermediary, and
(c) the circumstances are such that, had the arrangements taken the form of a contract between the worker and the client, the worker would be regarded for the purposes of Parts I to V of the Contributions and Benefits Act as employed in employed earner's employment by the client.
(2) Paragraph (1)(b) has effect irrespective of whether or not—
(a) there exists a contract between the client and the worker, or
(b) the worker is the holder of an office with the client.
(3) Where these Regulations apply—
(a) the worker is treated, for the purposes of Parts I to V of the Contributions and Benefits Act, and in relation to the amount deriving from relevant payments and relevant benefits that is calculated in accordance with regulation 7 (“the worker's attributable earnings”), as employed in employed earner's employment by the intermediary, and
(b) the intermediary, whether or not he fulfils the conditions prescribed under section 1(6)(a) of the Contributions and Benefits Act for secondary contributors, is treated for those purposes as the secondary contributor in respect of the worker's attributable earnings,
and Parts I to V of that Act have effect accordingly.
(4) Any issue whether the circumstances are such as are mentioned in paragraph (1)(c) is an issue relating to contributions that is prescribed for the purposes of section 8(1)(m) of the Social Security Contributions (Transfer of Functions, etc) Act 1999 (decision by officer of the Board).”
50 The Income Tax (Earnings and Pensions) Act 2003 makes similar provision as follows:-
“49 Engagements to which this Chapter applies
(1) This Chapter applies where—
(a) an individual (“the worker”) personally performs, or is under an obligation personally to perform, services [for another person] (“the client”),
(b) the services are provided not under a contract directly between the client and the worker but under arrangements involving a third party (“the intermediary”), and
(c) the circumstances are such that, if the services were provided under a contract directly between the client and the worker, the worker would be regarded for income tax purposes as an employee of the client.
(2) . . .
(3) The reference in subsection (1)(b) to a “third party” includes a partnership or unincorporated body of which the worker is a member.
(4) The circumstances referred to in subsection (1)(c) include the terms on which the services are provided, having regard to the terms of the contracts forming part of the arrangements under which the services are provided.
(5) In this Chapter “engagement to which this Chapter applies” means any such provision of services as is mentioned in subsection (1).
50 Worker treated as receiving earnings from employment
(1) If, in the case of an engagement to which this Chapter applies, in any tax year—
(a) the conditions specified in section 51, 52 or 53 are met in relation to the intermediary, and
(b) the worker, or an associate of the worker—
(i) receives from the intermediary, directly or indirectly, a payment or benefit that is not employment income, or
(ii) has rights which entitle, or which in any circumstances would entitle, the worker or associate to receive from the intermediary, directly or indirectly, any such payment or benefit,
the intermediary is treated as making to the worker, and the worker is treated as receiving, in that year a payment which is to be treated as earnings from an employment (“the deemed employment payment”).
(2) A single payment is treated as made in respect of all engagements in relation to which the intermediary is treated as making a payment to the worker in the tax year.
(3) The deemed employment payment is treated as made at the end of the tax year, unless section 57 applies (earlier date of deemed payment in certain cases).
(4) In this Chapter “the relevant engagements”, in relation to a deemed employment payment, means the engagements mentioned in subsection (2).
51 Conditions of liability where intermediary is a company
(1) Where the intermediary is a company the conditions are that the intermediary is not an associated company of the client that falls within subsection (2) and either—
(a) the worker has a material interest in the intermediary, or
(b) the payment or benefit mentioned in section 50(1)(b)—
(i) is received or receivable by the worker directly from the intermediary, and
(ii) can reasonably be taken to represent remuneration for services provided by the worker to the client.
(2) An associated company of the client falls within this subsection if it is such a company by reason of the intermediary and the client being under the control—
(a) of the worker, or
(b) of the worker and other persons.
(3) A worker is treated as having a material interest in a company if—
(a) the worker, alone or with one or more associates of the worker, or
(b) an associate of the worker, with or without other such associates,
has a material interest in the company.
(4) For this purpose a material interest means—
(a) beneficial ownership of, or the ability to control, directly or through the medium of other companies or by any other indirect means, more than 5% of the ordinary share capital of the company; or
(b) possession of, or entitlement to acquire, rights entitling the holder to receive more than 5% of any distributions that may be made by the company; or
(c) where the company is a close company, possession of, or entitlement to acquire, rights that would in the event of the winding up of the company, or in any other circumstances, entitle the holder to receive more than 5% of the assets that would then be available for distribution among the participators.
(5) In subsection (4)(c) “participator” has the meaning given by section 417(1) of ICTA.
59 Provisions applicable to multiple intermediaries
(1) The provisions of this section apply where in the case of an engagement to which this Chapter applies the arrangements involve more than one relevant intermediary.
(2) All relevant intermediaries in relation to the engagement are jointly and severally liable, subject to subsection (3), to account for any amount required under the PAYE provisions to be deducted from a deemed employment payment treated as made by any of them—
(a) in respect of that engagement, or
(b) in respect of that engagement together with other engagements.
(3) An intermediary is not so liable if it has not received any payment or benefit in respect of that engagement or any such other engagement as is mentioned in subsection (2)(b).
(4) Subsection (5) applies where a payment or benefit has been made or provided, directly or indirectly, from one relevant intermediary to another in respect of the engagement.
(5) In that case, the amount taken into account in relation to any intermediary in step 1 or step 2 of section 54(1) is reduced to such extent as is necessary to avoid double-counting having regard to the amount so taken into account in relation to any other intermediary.
(6) Except as provided by subsections (2) to (5), the provisions of this Chapter apply separately in relation to each relevant intermediary.
(7) In this section “relevant intermediary” means an intermediary in relation to which the conditions specified in section 51, 52 or 53 are met.”
The case law
51 It will be seen the statutory hypothesis which has to be applied to the actual facts found is this: what contract would in the circumstances have existed between them if the worker (Mr Fitzpatrick) had been engaged directly by the client (Airbus)? It is on the basis of that hypothetical contract that the fiscal consequences are determined.
52 The process of reaching this conclusion involves what Sir Stephen Oliver QC, sitting as Presiding Special Commissioner in Tilbury Consulting Ltd v. Gittins (No 2)  STC (SCD) 72, at , has described in these terms:-
“The legislation calls for a two stage exercise. The first is to find the facts as they existed during the period covered by the decision. The facts to be found are those that serve to identify the ‘arrangements’ involving the intermediary and the circumstances in which those arrangements existed and the nature of the services performed by the ‘worker’. The second is to assume that worker [Mr Fitzpatrick] was contracted to perform services to the client [Airbus] and to determine whether in the light of the facts as found [Mr Fitzpatrick] would be regarded as [Airbus’s] employee.”
53 From the considerable case law on this subject, we deduce the following guidelines for the tribunal in constructing the hypothetical contract.
(i) The contractual terms
In determining the relationship which existed, regard should be had primarily to the actual contract terms rather than to what in fact occurred: per Peter Gibson LJ in Express Echo Publications v. Tanton  IRLR 367 at . But in determining the ‘circumstances’ in which they are supplied (particularly where there is no privity of contract between the worker and the client), the legislation requires a view to be taken of the combined effect of the contracts and of their practical outworking: per Hart J in Synaptek Limited v. Young  EWHC 645, 75 TC 51, at  – but see also the observations of Henderson J in Dragonfly Consultancy Limited v. HMRC  STC 3030 at  to .
(ii) Personal service
The requirement that services must be performed personally has been seen as a characteristic of the employment relationship, and if it is not present the relationship will not be one of employer/employee: per Peter Gibson LJ in Express Echo at ; and the right to send a substitute to perform services, whether or not it is exercised, is inconsistent with employment: per Peter Gibson LJ in Express Echo at . That that view is applicable in every situation has however been doubted at High Court level several times: see e.g. per Henderson J in Dragonfly at  and  in favour of regarding a right of substitution being an indicator only of self-employment and not as necessarily a guarantor of it.
It does not follow that the terms of the notional contract would not reflect the terms of the third level contract with the end-user client (such as the absence of a right of substitution) merely because the service provider had at the time necessarily been unaware of those terms: per Park J in Usetech Limited v. Young (2004) 76 TC 811, at  to .
Freedom to perform work for another during the period of the engagement is not inconsistent with employee status: per Cooke J in Market Investigations Ltd v. Minister of Social Security (1969) 2 QB 173, at 187.
(iii) Mutuality of obligation
There may be mutuality of obligation in individual contracts made in an ongoing series of engagements, even though there is no obligation on either party to continue the series after the expiry of any of the individual contracts. The requirement for mutuality is satisfied if in each individual contract there is an obligation on the employer to continue paying, and the employee to continue working, until the specified work is complete: per Mummery LJ in Prater v. Cornwall County Council  2 All ER 1013, at  and Longmore LJ at .
Mutuality does not require the employer to provide the employee with work in addition to wages: per Stephenson LJ in Nethermere (St Neots) v. Taverna  IRLR 240, at 246. It is only where there is both no obligation to provide work and no obligation to pay the worker for time in which the work is not provided that the want of mutuality precludes the existence of a continuing contract of employment: per Park J in Usetech at .
An obligation on the employer to provide work, or in the absence of available work to pay, is a touchstone or feature one would expect to find in an employment contract and whose absence would call into question the existence of such a relationship: per Special Commissioner Hellier at first instance in Dragonfly Consultancy Limited v. HMRC  STC (SCD) 430 at . A termination notice clause implies an obligation on the employer to provide work until the right to terminate is exercised: per Hart J in Synaptek at .
Control of an employee’s work has traditionally been seen as a feature of a contract of service, and it includes the power of deciding the thing to be done, the way in which it shall be done, the means to be employed in doing it, the time and place where it shall be done; the right of control need not be unrestricted for an employee relationship to exist, particularly in the case of professional or skilled work. The right of control is a necessary though not always a sufficient condition of a contract of service, and in classifying the contract other matters besides control may be taken into account and it is not the sole determining factor: per MacKenna J in Ready Mixed Concrete (South East) Limited v. Minister of Pensions and National Insurance (1968) 2 QB 497, at 516; and per Cooke J in Market Investigations at 185.
(v) Business on own account
If the facts show that the service provider was effectively in business on his own account, that points to a contract for services but the weight to be given to it is a matter for the tribunal: per Hart J in Synaptek at . Among the factors relevant are whether the service provider provides his own equipment or hires his own helpers, what degree of financial risk he takes, what degree of responsibility for investment and management he has, whether and how far he has an opportunity of profiting from sound management in the performance of his task and whether the business he has is already established: per Cooke J in Market Investigations at 185; and the fact of invoicing for payment: per Special Commissioner Avery Jones in Lime-IT v. Justin SpC 342 (2002).
A course of business dealings in which the company (or its controlling director) has had a series of engagements with a succession of clients may be material to this issue: per Park J in Usetech at . The risk of bad debts and outstanding invoices is not normally associated with employment: per Nolan LJ in Hall v. Lorimer  STC 23, at 30.
In order to consider whether a person carries on business on his own account it is necessary to consider many different aspects of that person’s work activity. The object of the exercise is to paint a picture from the accumulation of detail: per Nolan LJ approving Mummery J in Hall v. Lorimer at 29.
(vi) Intention of the parties
A statement of the parties’ disavowing any intention to create a relationship of employment cannot prevail over the true legal effect of the agreement between them, but in a borderline case a statement of the parties’ intention may be taken into account and may tip the balance one way or the other; and, in the context of the intermediaries legislation, statements of intention made in relation to actual contracts with an agency are unlikely to throw more than minimal light on the proper characterisation of the notional contract between the worker and the client, though an expression of intention in such a contract remains a possibility: per Henderson J in Dragonfly at  and .
(vii) Overall view
The test of being an employee does not rest on a submission to orders but depends on whether the person is ‘part and parcel’ of the organisation: per Denning LJ in Bank voor Handel en Scheepvaart NV v. Slatford (1953) 1 QB 248, at 295. But see also the dissent from this proposition of MacKenna J in Ready Mixed Concrete at 525.
54 There has been substantial agreement between the parties as to the effective tests required by the legislation to be applied and, as we have noted, there is agreement in particular that there is for the purpose of this appeal no material difference between the ‘employed earner’ and the ‘employee’ tests and that the same criteria can be referred to in relation to each. Although there may in some cases be a distinction to be drawn between the two statutory formulations, we see none in the circumstances of this case and we are reassured by the observations of Henderson J in Dragonfly, at , that “Nine times out of ten, perhaps ninety nine times out of a hundred, the two tests will lead to the same answer”.
55 For the taxpayer it was submitted as follows:-
· Both the written contracts and the day to day circumstances in which Mr Fitzpatrick’s work was performed, and indeed Mr Fitzpatrick’s business circumstances at large, must be taken into account.
· Careful regard should be paid to whether the evidence shows as present the ‘irreducible minimum’ referred to by Stephenson LJ in Nethermere at 246 as necessary for a contract of service, namely a mutual obligation between the employer to provide payment and the employee to provide his own skill and work.
· A right of substitution is clear from the first and second level contracts and although Morson would have difficulties under its contract with Airbus in the event that substitution was required, such a right would be contained in the hypothetical contract. It had been admitted by Mr Pham that substitution would not have been impossible and could have been arranged. The fact of actual personal service throughout should not alter this.
· The appellant company was engaged for the performance of a specific project in circumstances typical of the freelance contracting marketplace, and atypical of an employment relationship.
· The general supervision and direction found in this case do not amount to control in the sense which is characteristic of employment relationships. The willingness of the court in Morren v. Swinton & Pendlebury Borough Council (1965) 1 WLR 576 to relax the requirement for control in the case of a skilled worker has not been reflected in the more recent authorities.
· The absence of sick pay, pension rights, healthcare facilities and holiday pay for Mr Fitzpatrick, invoicing for fees by MBF, its previous course of contracts and its VAT registration were all typical features of a business being carried on as such, and inconsistent with the notion of Mr Fitzpatrick being an employee. The cost of training being borne by MBF and the risk of bad debts occurring were to the same effect.
· The intention of both parties – Airbus and Mr Fitzpatrick - in constructing the hypothetical contract would clearly be to avoid employment status being created. Consistently with this, HMRC’s Employment Status Manual, at para 3286, assumes in cases of doubt a mutual intention to create a contract for services.
· The right of cancellation contained in clause 13.5 of the third level contract is inconsistent with the required mutuality of obligation in the case of employment; this is exemplified further in contractors being sent home without pay if there was for the time being no work for them to do.
· Clauses 3.2 and 3.3 of the first level contract MBF to GED should be construed as not requiring any work at all to be done, albeit that the rates per hour for work which was done were specified. The evidence showed that if Mr Fitzpatrick accepted a package of work then he would complete it but not that Airbus had any obligation to provide it.
· Clause 5.1(c) and(e) of the Airbus/Morson contract’s special conditions – the quality conditions – showed that if Airbus did not accept a piece of work they would not pay for it, contrary to the case of an employee whose work - even if it was poor - which would be paid for. Reworking of designs fitted that pattern as Mr Fitzpatrick fulfilled his task as a professional designer delivering a quality service.
· The evidence showed that there was a varied work pattern, with different hours frequently being worked as different issues arose to be dealt with; insofar as ‘core hours’ were covered, that was due to a need to co-ordinate with Airbus employees and not because Mr Fitzpatrick was a 9-5 worker. Work on site was not inconsistent with the independence of the worker.
56 For the Crown it was submitted:-
· Both the written contracts and the circumstances in which they were discharged must be considered in a two-stage process, first identifying the ‘arrangements’ and then the ‘circumstances’.
· The evidence shows that the normal minimum of 35 hours a week worked by Mr Fitzpatrick, the allocation of specific tasks to him, the following of Airbus’s instructions as to methods and systems of work, the scope of each task and the checks on work done which were made, all support a finding of the degree of control typical of an employed relationship. The appellant is wrong to say that Morren and the latitude it recognises in regard to control of skilled workers has not been followed in more recent decisions: it was for example cited with approval in Market Investigations and remains good law.
· Airbus’s requirements were clearly for the personal services of Mr Fitzpatrick and the hypothetical contract would not contain a substitution clause, pointing strongly to employment.
· The ‘irreducible minimum’ in regard to mutuality of obligation was present in that work was always available for Mr Fitzpatrick and he was always paid for it. The evidence showed the reality of mutual obligations, which would be imported into the notional contract.
· There was in reality no financial risk for MBF other than the costs of sickness and its only chance to increase profits was for Mr Fitzpatrick to work longer hours. Payment by the hour is more akin to a contract of service than to one for services. Negotiation of fees is no different to bargaining for wages.
· The equipment needed for the work performed was provided by Airbus, as an employer, and no equipment as such was provided by Mr Fitzpatrick; training at MBF’s cost may be consistent with employment.
· The continuity of work throughout the appeal period leads to the conclusion that Mr Fitzpatrick was dependent for that time on one party as his employer.
· The right to terminate on 7 days’ notice is characteristic of an employment contract.
· The evidence does not show that Mr Fitzpatrick was ‘part and parcel’ of Airbus’s organisation but that factor carries little weight on its own.
· The likely mutual intention to avoid employment status in the notional contract is irrelevant in view of the other pointers to a contract of service, since the parties cannot change the objective effect of the contract they make simply by re-labelling it.
· No work was done for others and in view of the hours worked it was unlikely that any such work could have been done. There is therefore the reality of exclusivity in the appeal period which is a relevant circumstance in establishing the notional contract; in any event, the factor is not determinative since many employees have more than one job.
· The contracts at levels 1 and 2 specified ‘normal working hours’ and quantities of hours for the work, while the level 3 contract was made also by reference to hours of work, which is not typical of an obligation under a contract for services: the notional contract would do the same, leading to a regime which was typical of employment. The same is true of the requirement for work to be done on location.
57 As a matter of overall impression, we are of the view that both the arrangements and the circumstances in which they took effect gave rise to the reality of a relationship - or a series of relationships during the appeal period - typical of that in a contract for services. Many factors, as might be expected, point in that direction in the various contracts.
58 Thus, even in the third level (Morson/Airbus) contract which at first sight looks like an agreement for the supply of casual staff who might be expected to be temporary employees, and which contains none of the explicit provision found in the level 1 and 2 contracts designed to establish clearly that they are contracts for services, there are features which mark it out as inappropriate for employees.
59 The first example of the third level contract provides for groups of persons to be supplied to Airbus, without making any distinction between them, and at hourly rates applicable to all the members of the group indifferently. There was no stated obligation for Airbus to offer a particular amount of work to any individual, and it is apparent that the total number of hours allocated to any group could be used up by its members unequally – one earning more than another because of a greater number of hours worked, consequent upon a greater volume of work allocated.
60 In the second example of this contract, there is the appearance of a set number of hours being allocated to Mr Fitzpatrick specifically, but it is apparent that this is in effect an accounting mechanism reflecting the different rates of hourly payment for each of the groups to which he was in turn allocated. And although Airbus had specifically chosen the persons to make up each group, vetting their CVs, and thus could be said to have required their personal services, there remains an absence of the mutuality of obligation needed for a contract of employment to exist.
61 Secondly, the right in third level contract to cancel without notice is characteristic of a contract for services but quite foreign to the world of employment, as is the provision for agreeing compensation in such an event. Each contracted worker was fundamentally insecure, having neither a specified rȏle in the company nor a particular line of duty beyond what was for time being allocated by the permanent staff. Clause 13.1.3 on the remedying of breaches, clause 16 requiring legal liability insurance to be effected by Morson and clause 20 placing the responsibility on Morson of complying with various statutory obligations point in the same direction; it is hard to imagine an employee in the normal way being affected by such terms. The fact that a form of contract intended for purchases of goods was pressed into service for another purpose is beside the point: this was the contract the parties made and it is the only one the tribunal can refer to.
62 Against such a background, the other terms of the third level contract which point to employment have less weight. They are consistent with a contract for services and are explained by the special needs of a very complex and commercially sensitive undertaking. They are: the selection of named individuals, payment by the hour, time recording, quality standard approvals, site working, and all intellectual property created and information involved vesting in Airbus.
63 The first and second level contracts are quite explicitly contracts for services and it is unnecessary to refer to them in any detail, so well known are the terms which typify such agreements and which they clearly contain. The only pointers to employment are the references to working normal or core hours, the differential rate in the first level contract for extra hours, the 7 day notice periods, the omission of the insurance obligation in the second level contract and the vesting of intellectual property rights in Airbus. As before, we do not see these provisions as altering the main character of the contracts and as being referable to the particular circumstances of the end-user.
64 Does the practical reality of working alter the conclusion which emerges from the contracts? In some respects, the evidence about this seems ambiguous: thus the negotiation of remuneration at various stages, the absence of any prospect of Mr Fitzpatrick actually sending a substitute, the degree of checking and approval of designs, the work allocation and coordination by the permanent team leaders, the broad similarity of working hours from one week to the next, the fact of almost all work being done on site, the close integration with Airbus’s own workers, all these could be interpreted either way. We are satisfied, however, that these factors should fairly be seen in the context of others which point to independence:
· Thus, the absence in reality of any thought that Mr Fitzpatrick might send a substitute to discharge his obligations is, as the authorities show, not inconsistent with his having been engaged as a professional man whose personal expertise was valued as might be that of an architect or surgeon. Against the background of MBF’s well-established existence and its history of engagements with various end-users, Mr Fitzpatrick’s status as a freelance specialist in his area is entirely credible.
· Both contractors and employees habitually negotiate and re-negotiate their remuneration whenever the chance presents itself. In the absence of any career structure for Mr Fitzpatrick, MBF’s negotiation of fees for new work is typical of how an independent provider would proceed, whereas an employee would tend to look as much for re-grading or promotion as a means of improving remuneration and there is no evidence of such behaviour on Mr Fitzpatrick’s part.
· The checking and approval required of design work was an inevitable necessity in a project in which every part was interdependent and was in addition subject to the approval of external authorities. This factor would have had to be present in respect of any work done for Airbus, as the special conditions as to quality approval in the third level contract testify, so that there may appear little difference between the position of employees and service providers: the difference came in the absence of disciplinary or grievance procedures for the contractors, the fact of having to rectify errors at their own expense and their liability to be laid off without notice.
· Mr Fitzpatrick’s design work had normally to be performed on site and with Airbus’s equipment because there was no other sensible way to do it, given the nature of the overall project of building an aircraft; there are many other examples of an independent contractor’s work being done on the client’s site and with the client’s equipment for the same sort of reasons: an electrician repairing a wiring circuit, a plumber adapting a drainage system, an engineer checking a safety installation on an oil rig, and so on. In the context, we do not see on-site working as a conclusive indicator of employment.
· Basic working or core hours needed, within reason, to be adhered to produce an efficient interface with Airbus’s staff, but given the variations in them which in fact occurred, in particular with regard to Mr Fitzpatrick’s starting and ending times in the day, the pattern of working does not seem to us to be typical of normal employee working habits.
· A further factor in this context which distances Mr Fitzpatrick’s situation from that of employment is payment for each hour worked and weekly invoices being submitted reflecting that; being sent home without pay when the Airbus computers broke down is a logical extension in that context, as is the absence of sick or holiday pay, the range of employee benefits generally and universal employer-provided training for work-related needs.
65 Other considerations pointing to a contract for services can be seen. Thus, the evidence does not show that Mr Fitzpatrick was ‘part and parcel’ of Airbus’s organisation in any but the most temporary and limited sense; the opportunity for other work to be undertaken simultaneously was there for Mr Fitzpatrick if he had chosen to limit his working hours for Airbus; the fact is established of differing payments following weekly invoicing; the financial fortunes of MBF vary depending on the work and remuneration available; MBF’s had a repeated need to find new clients for Mr Fitzpatrick’s skills; the parties’ plain intention, shown both in the contracts and in practical ways, was not to create an employment relationship.
The notional contract
66 We find that the contract which the legislation requires us to hypothesise would be a contract in which Mr Fitzpatrick would not be regarded for the purposes of Parts I to V of the Social Security Contributions and Benefits Act 1992 as employed in employed earner’s employment by Airbus, and one in which he would not be regarded for income tax purposes as an employee of Airbus. The appeals for the years 2003-04 and 2004-05 must therefore be allowed.
67 The appeals against HMRC’s decision and determinations for the years 2001-02, 2002-03, 2005-06 and 2006-07 are allowed for the reasons indicated at paragraph 3 above.
68 This document contains the full findings of fact and reasons for the decision. Any party dissatisfied with this decision has a right to apply for permission to appeal against it pursuant to Rule 39 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009. The application must be received by this Tribunal no later than 56 days after this decision is sent to that party. The parties are referred to “Guidance to accompany a Decision from the First-tier Tribunal (Tax Chamber)” which accompanies and forms part of this decision notice.