A builder has managed to thwart HMRC's in what had been considered a cut and dried employment status case. The grounds? Unfairness; the case had originally been heard in the taxpayer's absence.

Keith Gordon barrister, reported in November's Tax Adviser magazine on the procedural aspects of the case of Wright v HMRC. The case examined the employment status of Mr Wright's construction workers. However, Mr Wright was not present at the hearing and the Special Commissioner, Mr Nowlan acknowledged that this would have put him at a disadvantage. Mr Nowlan also noted that he was strongly pressed by HMRC to proceed with the case.

Under the Trubunal rules a party may apply for a case to be set aside if it is absent and it would be in the interests of justice to do so. Mr Wright decided to do so and his request was accepted; the case will be re-heard.

This is not the best news for HMRC; it had assumed that the final outcome of Wright was in its favour. So much so that it had even quoted it in its recent "False employment in the contruction industry" consultation. However, in another, similar case last year: Castle Construction (Chesterfield) Ltd v HMRC, over 300 construction workers were found to be self-employed, despite HMRC's assertions to the contrary. A key indicator of self-employed status in this case was that the workers were not paid to correct their mistakes.

The final outcome of Wright is not yet decided, as Keith points out, much depends on how the facts of a case are presented. Although he would say that, being a barrister, HMRC also agree that presentation is the key in employment status cases. Food for thought for Mr Wright.

Now that the new Tribunals have the power to demand a re-trial, it may mean that HMRC will not press for the continuation of a hearing if it will be unjust to do so.

 

 

 

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