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The taxpayer RALC was the personal service company of Mr Alcock an IT consultant. It provided his services for fixed periods under three sets of contractual arrangements. In each case there were four parties involved: Mr Alcock RALC an agency and the end client.
The First-tier Tribunal found that the arrangements were outside the intermediaries legislation. HMRC appealed.
The Upper Tribunal found the First-tier Tribunal had made material errors in law in not properly constructing a hypothetical contract for each of the engagements and in failing to apply the employment status test to those terms. The judges said: ‘It did not construct hypothetical contracts by asking itself what the contract terms would have been if Mr Alcock and the end clients had concluded their contracts directly and as a consequence it did not properly consider whether the resulting hypothetical contracts...
