“Regulation 4 amends Schedule 3 to the principal Regulations [ie, the 1978 regulations – see regulation 1(2)] by extending the description of employments in respect of which persons are treated as secondary Class 1 contributors to workers seconded, on or after6th April 1994 , by foreign employers to employers in Great Britain.”
“38. […] we consider, for the reasons set out below, that the purpose of the provisions is to cover secondment-like arrangements (as opposed to subcontracting of a service). It is not an anti-avoidance provision and would cover a secondment entered into for non-tax purposes. 39. “Personal service” has the same meaning as in the employment case law, namely the obligation that the employee work “by one’s own hands”, not “by another”. 40. When personal service is made available some degree of direction (which need not include a legal right to give such direction) necessarily abides with the person to whom the personal service is made available. If the foreign employer tells the employee to obey the host employer’s reasonable directions, which are made for the host employer’s business, and the employee does so, we consider the requirements for the personal service to be “made available” (sub-paragraph (a)) and “rendered” (sub-paragraph (b)) are satisfied.”
“77. If the foreign employer tells the employee to obey the host employer’s reasonable directions, which are made for the host employer’s business, and the employee does so we consider (a) and (b) [of para. 9 of Sch.3 to the 1978 regulations] are satisfied. We consider this to be the case even if (i) the foreign employer has not entered into any contractual agreement with the host employer, it can apply to voluntary arrangements; and (ii) whether or not there are any contractual restrictions on the foreign employer recalling the employee from their instruction of obedience to the directions of the host employer. 78. We consider the word “direction” to be more apt than management or control. Control might suggest a level of control equivalent to that in the second limb of Ready Mixed Concrete: that cannot be the case, otherwise there would be no foreign employer. Control in that sense also refers to a legal right against the employee. Management may suggest a power of the host employer to discipline or performance manage the employee: we do not consider that necessary. The host employer may (but need not) have a remedy against the foreign employer for inadequate performance by the employee. But that is not what (a) and (b) are driving at.”
“[…] viewed realistically it cannot be doubted that the sole purpose of the scheme was aimed at avoiding National Insurance. The lack of any other purpose was shown by how the scheme was unwound in 2014, once the legislation was changed that arguably had made the scheme effective.”
“215. The personal service was “made available” to Bilfinger UK, for the purposes of Bilfinger UK’s business, by the core team’s deployment on the platform: where they worked to fulfil Bilfinger UK’s obligations under the Marathon Contract. 216. The employees worked as part of a team that was, on the platform, ultimately accountable to the Services Supervisor, themselves a Bilfinger Guernsey employee. The core team generally perceived themselves to be working for Bilfinger UK. Mr Carson, then Services Supervisor, identified Mr Forbes as his boss. Through this chain of command the personal service of the core team was placed at the disposal of Bilfinger UK, that was sufficiently able to direct the core team to ensure that personal service was rendered on a day-to-day basis. For the most part this was achieved through the deployment. The initial core team had previously been working in the same roles when employees of Bilfinger UK. Following their transfer it was just a matter of carrying on as before. 217. An illustration of what happened when the employees did not make themselves available for work was E1, who was the subject of the disciplinary proceedings for excessive use of a work phone, for personal calls, during working hours. A written warning was issued by Bilfinger Guernsey on the recommendation of Mr Forbes. We heard a great deal concerning irregular events such as this, however we consider them to be of limited significance compared to the day-to-day operational norm that the core team operated under the direction of Bilfinger UK. 218. Marathon was the client of Bilfinger UK. Ultimately the work of the core team was for the benefit of Marathon. However, viewed realistically the personal service of the core team was made available to Bilfinger UK, not Marathon. In making this finding we consider it relevant that there was no contract between Bilfinger Guernsey and Marathon: so from the legal perspective of the LSE Contract the personal service was made available to Bilfinger UK. From a commercial perspective there was no reason why Bilfinger Guernsey would wish to benefit Marathon, other than its contractual obligation to Bilfinger UK. We also consider it relevant that the core team identified themselves as working for Bilfinger UK. 219. Bilfinger Guernsey retained “control” in the employment law sense: the core team were still their employees. But the control by Bilfinger Guernsey was generally exercised on the advice of Bilfinger UK. This is unsurprising since the control by Bilfinger Guernsey was exercised from a remote location, by non-technical staff, who knew little or nothing of the work being done, and that control deployed by staff employed primarily by Voyonic, whose services were in employment, not platform operations.”
“29. […] Words and passages in a statute derive their meaning from their context. A phrase or passage must be read in the context of the section as a whole and in the wider context of a relevant group of sections. Other provisions in a statute and the statute as a whole may provide the relevant context. They are the words which Parliament has chosen to enact as an expression of the purpose of the legislation and are therefore the primary source by which meaning is ascertained. […] 30. External aids to interpretation therefore must play a secondary role. Explanatory notes, prepared under the authority of Parliament, may cast light on the meaning of particular statutory provisions. Other sources, such as Law Commission reports, reports of Royal Commissions and advisory committees, and Government White Papers may disclose the background to a statute and assist the court to identify not only the mischief which it addresses but also the purpose of the legislation, thereby assisting a purposive interpretation of a particular statutory provision. […] But none of these external aids displace the meanings conveyed by the words of a statute that, after consideration of that context, are clear and unambiguous and which do not produce absurdity.”
“11. The result of applying the purposive approach to fiscal legislation has often been to disregard transactions or elements of transactions which have no business purpose and have as their sole aim the avoidance of tax. This is not because of any principle that a transaction otherwise effective to achieve a tax advantage should be treated as ineffective to do so if it is undertaken for the purpose of tax avoidance. It is because it is not generally to be expected that Parliament intends to exempt from tax a transaction which has no purpose other than tax avoidance. [...] 12. Another aspect of the Ramsay approach is that, where a scheme aimed at avoiding tax involves a series of steps planned in advance, it is both permissible and necessary not just to consider the particular steps individually but to consider the scheme as a whole. Again, this is no more than an application of general principle. Although a statute must be applied to a state of affairs which exists, or to a transaction which occurs, at a particular point in time, the question whether the state of affairs or the transaction was part of a preconceived plan which included further steps may well be relevant to whether the state of affairs or transaction falls within the statutory description, construed in the light of its purpose. […] 13. The decision of the House of Lords in the Barclays Mercantile case made it clear beyond dispute that the approach for which the Ramsay line of cases is authority is an application of general principles of statutory interpretation. Lord Nicholls of Birkenhead, delivering the joint opinion of the appellate committee (which also comprised Lord Steyn, Lord Hoffmann, Lord Hope of Craighead and Lord Walker of Gestingthorpe), identified the “essence” of the approach (at para 32) as being: “to give the statutory provision a purposive construction in order to determine the nature of the transaction to which it was intended to apply and then to decide whether the actual transaction (which might involve considering the overall effect of a number of elements intended to operate together) answered to the statutory description.” […]” “to give the statutory provision a purposive construction in order to determine the nature of the transaction to which it was intended to apply and then to decide whether the actual transaction (which might involve considering the overall effect of a number of elements intended to operate together) answered to the statutory description.” […]”
“The meaning of an ordinary word of the English language is not a question of law. The proper construction of a statute is a question of law. If the context shows that a word is used in an unusual sense the Court will determine in other words what that unusual sense is. But here there is in my opinion no question of the word “insulting” being used in any unusual sense. It appears to me, for reasons which I shall give later, to be intended to have its ordinary meaning. It is for the tribunal which decides the case to consider, not as law but as fact, whether in thewhole circumstances the words of the statute do or do not as a matter ofordinary usage of the English language cover or apply to the facts which have been proved.”
“No doubt the Court could act as a dictionary. It could direct the tribunalto take some word or phrase other than the word in the statute and considerwhether that word or phrase applied to or covered the facts proved. Butwe have been warned time and again not to substitute other words for thewords of a statute. And there is very good reason for that. Few wordshave exact synonyms. The overtones are almost always different. Or the Court could frame a definition. But then again the tribunal wouldbe left with words to consider.”
“Parliament has given no indication that the word is to be given anyunusual meaning. Insulting means insulting and nothing else.”
“82. It is also material to observe that the phrase “ceases to own” is expressed in simple, non-technical language which should require no elaboration to unpack its meaning. Neither “ceases” nor “own” is defined, so each word should be given its ordinary and natural meaning; and, as we have seen, “own” is intended to be synonymous with “belongs to” in the predecessor legislation, which was a similarly non-technical and everyday expression. 83. The question which must therefore be answered is whether, as a matter of ordinary language, and in a real and practical sense, the taxpayers ceased to own the assets which they sold to the Bank as step 1 in the scheme. In answering that question, it is elementary that the scheme must be regarded as a whole, and as it was intended to operate. […] 84. […] 85. Adopting this holistic approach, and on the basis of the unchallenged facts found by the FTT, I have little hesitation in concluding that the taxpayers did not cease to own the relevant assets within the meaning of section 61(1)(a) when they were sold to the Bank. On the contrary, the whole purpose of the scheme was that the same assets would be returned to the sole beneficial ownership of the taxpayers upon exercise of the put option by the Bank three weeks later, and that for all practical purposes the taxpayers would continue to have the uninterrupted beneficial use of the assets for the purposes of their trade in the meantime. On the FTT's findings, the scheme was entirely tax-motivated and none of the steps in it had any real commercial purpose. […]”
“Employment, whether or not under a contract of service (not being employment described in paragraph 2 in column (B) of Schedule 1 to these regulations or an employment to which paragraph 1, 4, 5, 7 or 8 of this Schedule applies) in which the person employed renders, or is under an obligation to render, personal service and is subject to supervision, direction or control, or to the right of supervision, direction or control, as to the manner of the rendering of such service and where the person employed is supplied by or through some third person (including, in the case of a body of persons unincorporate, a body of which the person employed is a member) …”
“Employment by a foreign employer where in pursuance of that employment the personal service of the person employed is made available to a host employer; and the personal service is rendered for the purposes of the business of that host employer.”
“No doubt the Court could act as a dictionary. It could direct the tribunalto take some word or phrase other than the word in the statute and considerwhether that word or phrase applied to or covered the facts proved. Butwe have been warned time and again not to substitute other words for thewords of a statute. And there is very good reason for that. Few wordshave exact synonyms. The overtones are almost always different. Or the Court could frame a definition. But then again the tribunal wouldbe left with words to consider.”
“I would accept the submission of Mr Gibbon that, if the Upper Tribunal finds an error of law to have been made, it then has a broad discretion whether or not to set aside the decision of the FTT. That is the clear import of the words “may (but need not) set aside”, and in my view it would be wrong in principle to interpret the scope of this discretion by reference to the previous law on tax appeals under TMA 1970. TCEA 2007 set up a new tribunal structure, and the provisions of section 12 apply to all chambers of the Upper Tribunal, not merely to the Tax & Chancery Chamber. That said, however, I consider that a test of materiality will still have a crucial, and usually decisive, role to play in the decision of the Upper Tribunal whether or not to set aside the decision of the FTT, and likewise in the decision of this court if an error of law by the Upper Tribunal is established. At least in cases of the present type, I find it difficult to envisage circumstances in which the Upper Tribunal could properly leave the decision of the FTT to stand, once it is satisfied that the error of law might (not would) have made a difference to that decision. As a taxpayer, Mr Degorce is entitled to be taxed according to the law, and if an error of law is detected in the FTT’s decision, which is material in the sense I have mentioned, justice will normally require nothing less than that the decision be set aside. Conversely, if an error of law is made, but the Upper Tribunal is satisfied that it was immaterial, there will be no injustice to Mr Degorce in allowing the decision of the FTT to stand.”