In Paya Limited and Tim Willcox Limited v HMRC [2016] UKFTT 0660 (TC), the First-tier Tribunal (FTT) held that the BBC could not provide witness evidence of its own motion to the FTT in tax appeals, to which it was not a party.

Background

The two appellant companies (the "taxpayers") were personal service companies of BBC presenters. They were assessed to income tax and National Insurance Contributions in relation to engagements between the taxpayers and the BBC, under Part 2, Chapter 8 of the Income Tax (Earnings and Pensions) Act 2003 and the Social Security Intermediaries Regulations 2000, commonly referred to as the IR35 legislation. The taxpayers appealed their assessments and their appeals were progressing before the FTT.

Both HMRC and the taxpayers anticipated calling witnesses who were current or former employees of the BBC. By 2015, HMRC had opened enquiries into about 100 potential IR35 cases concerning companies providing the services of individuals to the BBC and the BBC decided that it could no longer deal with the enquiries on a case-by-case basis and wished to take a more active role in the preparation of witness statements. It wished to submit witness evidence to the FTT about its Editorial Guidelines and how its news room operated.

The BBC applied to the FTT for a direction that evidence from BBC witnesses be prepared and submitted to the FTT by the BBC's legal team rather than by the parties to the appeal. The BBC would retain control over the evidence given by BBC witnesses, who might include individuals not called by either party.

At a preliminary hearing, the FTT was asked to determine whether it had jurisdiction to entertain an application to provide witness evidence made by a non-party (the BBC) of its own motion and not at the request of the parties or the FTT.

FTT's decision

The FTT rejected the BBC's application.

In reaching its conclusion, the FTT analysed the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 (the "Rules") and concluded as follows:

  • the Rules do not explicitly give the FTT jurisdiction to allow a non-party's application to supply evidence or documents and nor do they provide the FTT with the power to impose sanctions to ensure that person's compliance with any directions issued by the FTT or the Rules;
  • whilst the Rules require the FTT to avoid unnecessary formality and to seek flexibility in proceedings, the FTT cannot step outside the Rules all together; and
  • although the Rules give the FTT power to regulate its own procedure, that power is limited by the nature of the FTT's jurisdiction and the FTT's adversarial jurisdiction does not permit a non-party to provide witness evidence, unless the person had applied unsuccessfully to be added as a party and the FTT had decided of its own motion that the person should nevertheless be allowed to provide evidence under Rule 9(4) of the Rules.

Comment

The BBC's application, if it had been successful, would have undermined the parties' right to put forward their own case as they considered appropriate and the FTT's decision is not therefore surprising. Both the taxpayers and HMRC opposed the application and the FTT was of the view that it is for the parties to decide what evidence they wish to call.

There are of course other ways for a non-party to intervene in a tax appeal before the FTT, such as at the request of either party, or on its own initiative the FTT may direct a non-party to submit evidence, or a non-party may seek to be joined as a party.

Not being party to the proceedings the BBC has no right of appeal against the FTT's decision.

A copy of the decision can be found here.