Gillies and Mackay Ltd v Construction Industry Training Board (CITB): 4101230/2025
JUDGMENT
The Judgment of the Employment Tribunal is that the appellant’s appeal fails, and is dismissed.REASONS
[1]The appellant submitted an appeal against a Construction Industry Training Board (CITB) Levy Assessment, in which they argued that the levy assessments for 2022 and 2023 should not have been imposed upon them. They argued that the appellant company should not be in scope for CITB registration and levy.[2]The respondent submitted an ET3 in which they resisted the appeal, and maintained that the application of the levy was entirely appropriate in the circumstances. ETZ4(WR)[3]A Levy Appeal Hearing was listed to take place at the Employment Tribunal, Dundee, on 22 October 2025. Ms Mackay, the appellant’s Chief Executive Officer (CEO), appeared for the appellant. Mr Byrne, an ITA Compliance Manager employed by the respondent, appeared for the respondent.[4]The parties each made oral submissions, though the respondent’s submissions supplemented the written representations which were included within the Joint Bundle of Productions produced by the parties (31ff).[5]I set out a summary of the submissions, and of the relevant law, and then my decision and the reasons for it, below. Submissions - Appellant[6]Ms Mackay submitted that the business spends the majority of its time on matters other than construction, and finds customers by education, comparison, reviews and pricing for the entire industry of garden timber buildings.[7]She maintained that the company is “brand-led” first, and that the value of the company is based on the brand. The respondent, she said, was relying heavily on 2021’s information as to what the company does. In 2021, the appellant made summer houses, and manufactured window frames and doors. However, a decision was made in late 2022 to discontinue these items, and they were withdrawn from the market in 2023. The business therefore changed their focus, and marketing, to suit a higher value market, making and supplying garages, garden rooms and workshops/sheds.[8]Ms Mackay argued that the respondent’s improper reliance on outdated information improperly extended the definition of scope to include the appellant. The structures are made so as to be able to stand alone, so they can be taken down and put up. She referred to the High Court decision in Mark Wilkinson Furniture Limited v Construction Industry Training Board CO/1318/00 (96ff), and sought to distinguish that case from the case before this Tribunal. In that case, she said, the company was engaged in fitting kitchens and wardrobes into the structure of houses, whereas here the appellant assembles garden houses on site outwith the buildings.[9]She insisted that 76% of the business’s time is spent on creating the brand and becoming a thought leader in the industry. The appellant employs, for example, a full time content writer who writes 3 blogs a month for the learning centre which the company has.[10]She referred to the Employment Tribunal Judgment in Firthglow Ltd v Construction Industry Training Board (case no: 1902262/2001), and observed that a large proportion of Firthglow’s business was about sales, whereas the appellant’s business is not primarily about sales but about education.[11]The revenue of the appellant’s business comes from the buildings, and their sale to the customers. She criticised the respondent’s heavy reliance on those activities which the appellant no longer engages in.[12]She reiterated that 76% of the company’s time is spent on activities other than construction, which should mean that their primary function is out of the respondent’s scope. 4 out of the appellant’s 22 employees are engaged in production or site-based work.[13]She pointed out that a lot of businesses in the construction industry outsource their marketing and branding to agencies, whereas everything the appellant does is in-house. She made reference to a number of roles in the company (154ff). For example, Amy Hanlon is the company’s Digital Manager with responsibility for leading the appellant’s online presence, customer experience and digital growth; Sophie Marshall is a content creator; Kieran Bain is a Sales Manager, taking the customer through the buying process.[14]The Learning Centre (166ff) is an online sales resource which, Ms Mackay said, answers customer questions, educates buyers and provides transparent guidance on the company’s products. She maintained that this demonstrates that the appellant’s primary focus is marketing, education and customer experience, not construction. These activities cannot be categorised as construction. As she put it, this activity does not have to be about sheds.[15]She concluded by submitting that she believed that the appellant is not wholly or mainly engaged in construction, and that this is not supported by law or reality. Submissions - Respondent[16]For the respondent, Mr Byrne set out what he considered to be the issues for the Tribunal to determine, as follows: 1. Whether the manufacture of timber sheds, summer houses, garden rooms and garages fall within the CITB’s remit as construction industry activities; 2. Whether the construction/erection of timber sheds, summer houses, garden rooms and garages fall within the CITB’s remit as construction industry activities; and 3. Whether the appellant’s sales, marketing, design, customer service, administration and leadership activities fall within CITB’s remit as construction activities.[17]He set out the legal provisions relevant to this appeal, and to the right of the respondent to impose a levy in order to ensure adequate training in the construction industry. The relevant Levy Order was issued in 2022 (81).[18]Businesses in the construction industry have no obligation to make themselves known to the CITB, though on occasions some businesses actively seek registration with the respondent as they have identified it as the relevant body.[19]He confirmed that the appellant approached the respondent on 12 March 2021 for levy registration (122), and for reconsideration of the respondent’s earlier view that it was out of scope for registration. The respondent sought further information about their activities (124), which the appellant provided (127), in July 2021.[20]The respondent then determined that the appellant was in scope for the levy, and that they could access funding.[21]In October 2022, he said, the appellant did make a claim for a grant in support for 4 NVQs in Woodworking at £600 each. A payment was made to the appellant in this regard of £2,400 in November 2022.[22]The 2022 levy assessment was imposed by the respondent in March 2023, by Notice (48), in accordance with the 2022 Order. The appellant appeals against that levy assessment.[23]The respondent submits that the levy assessment was correct.[24]Mr Byrne submitted that this was a case in which the appellant does not sub-contract activities, and that all employees were directly employed by them.[25]The appellant provided not only the information at 127 but also further information on 30 May 2025 (138).[26]Mr Byrne submitted that the principal activities of the appellant amounted to activities within the construction industry, and that the non-construction activities are only needed because of the construction activities undertaken by them.[27]The Order refers to ancillary activities, or related activities. The Order captures these activities under the construction industry, and it can result in a company which is engaged in related activities for the majority of its time still to be eligible to pay the levy.[28]He referred to the different job profiles mentioned by the appellant, such as content creation, digital marketing and sales management, but submitted that if one takes away the manufacture and erection of products, these activities would disappear too.[29]He submitted that the levy was correctly imposed on the appellant in this case. Further Submissions - Appellant[30]The claimant maintained that the respondent, in continuing to refer to summer houses (138) related to the prior business model of the appellant, rather than the current one.[31]The construction activities do not amount to more than 50% of the business carried out by the appellant, she said, and ancillary activities would only be relevant to the matter if the other activities were above 50%.[32]To distinguish between the different parts of the business, Ms Mackay said that “to sell a shed I do not need a shed”; the sheds are not made until they have been sold. In other words, a customer purchases, in effect, a commission to build and supply a shed to them. Selling and marketing comes first, and the value of the appellant’s business comes proportionately from the brand asset. Nobody would buy from the business without the brand.[33]She said that the appellant understood that they needed to be registered with CITB in order to put people through training in joinery, but it became clear to them that the CITB was not related to what the business needed.The Relevant Law
[34]Section 1(1) of the Industrial Training Act 1982 provides: “For the purpose of making better provision for the training of persons over compulsory school age (in Scotland school age) for employment in any activities of industry or commerce the Secretary of State may, subject to the provisions of this section, make an order specifying those activities and establishing a board to exercise in relation to them the functions conferred on industrial training boards by the following provisions of this Act.”[35]Section 5 of the 1982 Act gives industrial training boards, of which the respondent is one, certain powers, for the purpose of encouraging adequate training of persons employed or intending to be employed in the industry.[36]Section 11 of the 1982 Act provides that an industrial training board may make proposals for the raising and collection of a levy, for the purpose of raising money towards meeting the board’s expenses. Section 11(2) states: “The levy shall be imposed in accordance with an order made by the Secretary of State (in this Act referred to as ‘a levy order’) which shall give effect to levy proposals approved by the Commission under subsection (1) above and shall provide for the levy to be imposed on employers in the industry…”[37]This appeal is submitted under section 12(4) and (5) of the 1982 Act.[38]The Industrial Training Levy (Construction Industry Training Board) Order 2022 (“the 2022 Levy Order”) set out a number of provisions of relevance to this appeal.[39]Article 2 contains a number of definitions, including, at 2(1)(e), the definition of the “construction industry”, which “means the activities of the construction industry as defined by Schedule 1 to the Industrial Training (Construction Board) Order 1964 read together with the Orders listed in the Schedule to this Order.”[40]Article 3 provides that a levy is to be imposed on employers in respect of a number of levy periods, commencing with the Order and ending on 31 March 2024.[41]Article 5 states that the Board must assess the amount of levy to be paid in respect of each construction establishment of an employer in respect of each levy period. It went on, in 5(2), to provide: “In this Order, ‘construction establishment’ means any particular establishment of the employer engaged wholly or mainly in the construction industry for the necessary period.”[42]Article 7 provides for the calculation of the levy.[43]The Industrial Training (Construction Board) Order 1964 (Amendment) Order 1992 (“the Scope Order”) provides, at Article 2: “The activities in relation to which the Board exercises the functions conferred by the Act upon industrial training boards shall, in lieu of the activities specified in Schedule 1 to the principal Order, be the activities specified in Schedule 1 to this Order, and accordingly in the principal Order the latter Schedule shall be substituted for the former Schedule.”[44]The “principal Order” meant the Industrial Training (Construction Board) Order 1964, which this Order was designed to amend.[45]Schedule 1(1) to the Scope Order provided: “Subject to the provisions of this Schedule, the activities of the construction industry are the following activities in so far as they are carried out in Great Britain:- (a) all operations in – (i) the construction, alteration, repair or demolition of a building or part of a building… (e) the manufacture of – (i) doors, window frames, built-in storage units, stairs or curtain walling being articles wholly or mainly of wood; (ii) bank, church or laboratory joinery or joinery of any other kind.”[46]Schedule 1(2) provided that there shall not be included in the activities of the construction industry a number of defined activities, including, at 2(b): “the activities of any establishment engaged wholly or mainly in related activities, being activities –(i) incidental or ancillary to the activities of one or more establishments (in this sub-paragraph hereafter referred to as ‘the principal establishment’) engaged wholly or mainly in any activities not being principal activities of the construction industry and;(ii) carried out by the employer carrying on the principal establishment or, where the employer is a company, by the company or by an associated company of the company;”[47]Further definitions are found at Schedule 1(3).[48]“Building” was defined as including “any erection in the nature of a building”.[49]“Manufacture” was defined as including “assembly or any process or operation incidental or appertaining to manufacture or assembly.”[50]“Principal activities of the construction industry” was defined as “activities which, subject to the provisions of paragraph 2 of this Schedule, are defined in paragraph 1, other than sub-paragraphs (h) and (i) thereof, as activities of the construction industry.”[51]“Related activities” was defined as “any of the following activities, that is to say – (a) research, development, design or drawing; (b) buying, selling, letting out on hire, testing, advertising, packing, distribution, transport or any similar operations; (c) operations of a kind performed at office premises or laboratories or at sores, warehouses or similar places; (d) cleaning, washing or garaging vehicles or carrying out running repairs or minor adjustments thereto; (e) training of employees or apprentices.”[52]Both parties referred to The Queen on the Application of Bobcat Plant Hire (UK) Limited v Construction Industry Training Board [2003] EWHC 2383, a decision of the High Court of Justice, Queen’s Bench Division. This was an appeal by Bobcat Plant Hire Limited against a decision of the Employment Tribunal dismissing their appeal from an assessment notice issued by the CITB determining that the company was liable to an industrial training levy.[53]At paragraph 17 of that decision (112), Nicolas Blake QC confirmed that the respondent is required to count how many employees are engaged in construction as opposed to non-construction activities, or where an employee is engaged in numerous activities, what proportion of their time is spent engaged in construction as opposed to non-construction. Those establishments which have the majority (over 50% of their employees, or employees’ time, engaged in construction industry activities, will be subject to levy assessment. Discussion and Decision[54]The respondent set out a number of issues for the Tribunal to determine, and I am content to adopt these.[55]Essentially, the appellant’s argument is that since the majority of their time, both in terms of staff and activity, is spent on non-construction activities such as marketing, branding and selling, as well as education, the company should not be considered to be in scope.[56]It is noted that the appellant sought registration with the respondent and was able to have access to a grant of £2,400 for training apprentices before taking the view that they should not be subject to the levy.[57]The issues are: 1. Whether the manufacture of timber sheds, summer houses, garden rooms and garages fall within the CITB’s remit as construction industry activities; 2. Whether the construction/erection of timber sheds, summer houses, garden rooms and garages fall within the CITB’s remit as construction industry activities; and 3. Whether the appellant’s sales, marketing, design, customer service, administration and leadership activities fall within CITB’s remit as construction activities.[58]I deal with each of these issues in turn. 1. Whether the manufacture of timber sheds, summer houses, garden rooms and garages fall within the CITB’s remit as construction industry activities;[59]One of the complaints presented by Ms Mackay was that the respondent was relying upon outdated information. However, it is clear, and in my view was clear to the respondent, that the appellant no longer makes window frames and doors. Ms Mackay suggested that they no longer make summer houses, but that they now focus upon garages, garden rooms and workshops and sheds. It is not clear precisely what distinguishes a summer house from these erections but in my view there is no difficulty in understanding the position of the respondent in relation to the updated information provided by the appellant.[60]Schedule 1 of the Scope Order sets out what is intended to be covered.[61]This includes the construction of a building or part of a building, which is defined as an erection in the nature of a building. It is clear, in my judgment, that a garden shed, a garage, a garden room and a workshop, constructed as stand-alone erections in a garden, are erections in the nature of a building, and accordingly the construction of such erections amounts to the construction of a building.[62]The Scope Order also includes joinery of any kind, including the construction of window and door frames made of wood.[63]It is therefore my judgment that the activities of the appellant in manufacturing timber sheds, garden rooms, workshops and garages (to take the activities confirmed by the appellant) fall within the respondent’s remit as construction industry activities. 2. Whether the construction/erection of timber sheds, summer houses, garden rooms and garages fall within the CITB’s remit as construction industry activities;[64]Similarly, the construction and erection of timber sheds, garden rooms, garages and workshops fall within the respondent’s remit as construction industry activities as they involve the construction of a building, in the nature of a building. 3. Whether the appellant’s sales, marketing, design, customer service, administration and leadership activities fall within CITB’s remit as construction activities.[65]The respondent’s position is that these activities amount to ancillary activities to the principal activities of the construction industry.[66]The appellant’s position appears to be that these are activities which are entirely separate to the construction or manufacture of sheds and similar constructions.[67]The Firthglow judgment is of assistance here, though it is of course the decision of another Employment Tribunal and useful but not binding upon me. There the business was engaged in the installation of wall coatings, which was deemed to be a principal construction industry activity. 22% of the total wages paid to employees was in relation to the installation of wall coatings, whereas 78% was in relation to employees engaged in selling, administration and management.[68]The Tribunal found in that case that the business was principally that of wall coatings. Without that there would be nothing. It was described as not being a sales operation independent of the product it was selling, which had different products to sell and which may change the product it sells over a period of time.[69]They then found that selling of that function (installation of wall coatings) was a related activity, as was the associated finance products, and accordingly the staff employed to be engaged in the selling, administration or management were ancillary or incidental to the wall coatings business, being subsidiary and supplementary to it.[70]On 30 May 2025, the appellant set out the percentages of their activities (138):• “Sheds – related activities such as design, buying, selling, administration and accountancy – 0%• Manufacture of garages, garden rooms and summer houses including related activities such as design, buying, selling, administration and accountancy – 24.44%• Construction/erection of garages, garden rooms and summer houses including related activities such as design, buying, selling, administration and accountancy – 10.56%• Business Management and Support Services (non-construction activities eg digital, admin, leadership, sales, marketing, finance) – 65.00%”[71]While Ms Mackay sought to emphasise the importance of the Learning Centre operated by the appellant, this was not specifically identified in this list of activities, though it may be categorised as leadership or marketing. In this regard, she said that the company does everything to educate their customers to ensure that they make the best informed buying decision. She maintained that selling, for example, was entirely separate from the manufacture or erection of the items being sold. As she put it before me, “to sell a shed, I don’t need a shed”. It is possible that what she meant by that was that when a sale takes place to a customer, no shed actually exists, since the sale is of a bespoke item which is then designed and built according to the customer’s specifications. However, it was my understanding that she was arguing that the process of selling sheds was entirely separate from the manufacture of the sheds.[72]I have concluded that the respondent’s submission, that the digital, administrative, leadership, sales, marketing and finance functions are subsidiary to and therefore ancillary and related activities to the primary construction function of the company, is correct.[73]This is a business which exists in order to manufacture and erect buildings in gardens of customers who purchase them from them. That is a construction industry activity, and it is the primary function of the business. While Ms Mackay argued that “it does not have to be about sheds”, her business is about sheds; that is what it builds and supplies. Without that function, there is no need for marketing, selling, administration, finance or branding of the business. These activities cannot be said to be carried out in isolation: they only happen because the company sells customers garden sheds and similar products.[74]Accordingly, it is my judgment that the principal activities of the appellant are construction industry activities, and that the remaining activities of the business are related and ancillary to those activities; and therefore that the appellant’s appeal against the imposition of the levy by the respondent in this case must fail.[75]The appeal is therefore dismissed. 24 November 2025