MyPay Limited v The Commissioners for HMRC

23 October 2023

[2023] UKFTT 890 (TC)

First-tier Tribunal

Mypay argued it was the employer of temporary workers, but HMRC disagreed. Mypay tried to add a last-minute argument that they weren't the employer at all. The judge said that last-minute argument was weak and would unfairly hurt HMRC, so he refused to consider it. But the judge did let Mypay change some other parts of their argument.

Key Facts

•Mypay Limited appeals tax and national insurance determinations totaling approximately £1.4m for tax years 2014-15 and 2015-16.
•Mypay treated itself as the employer of workers contracted through agencies to end clients, deducting PAYE and NI.
•HMRC determined that there was no overarching employment contract, but rather separate contracts for each assignment.
•Mypay applied to amend its grounds of appeal to argue that if the 'Autoclenz' approach (considering the reality of the relationship despite written contract terms) were applied, there were no employment contracts at all (an alternative argument to its primary claim of an overarching contract).
•The application to amend was made late, after a previous amendment attempt was set aside.

Legal Principles

An application to amend will be refused if the proposed amendment has no real prospect of success (same test as summary judgment).

Quah v Goldman Sachs International [2015] EWHC 759 (Comm)

In considering very late amendments, a heavy burden lies on the applicant to show the strength of the new case and why justice requires it.

Quah v Goldman Sachs International [2015] EWHC 759 (Comm)

The merits test for amendment applications requires the claim to carry some degree of conviction, be coherent and properly particularised, and be supported by evidence.

Kawasaki Kisen Kaisha Ltd v James Kemball Ltd [2021] EWCA Civ 33

Autoclenz approach (considering reality over written terms) does not apply to determining employment contracts for tax purposes.

HMRC v Atholl House Productions Ltd [2022] EWCA Civ 501

Contractual interpretation should involve a realistic and worldly-wise examination, considering business common sense.

HMRC v Atholl House Productions Ltd [2022] EWCA Civ 501 and Consistent Group v Kalwak [2007] IRLR 560

Outcomes

Mypay's application to amend its grounds of appeal was refused.

The additional ground of appeal lacked real prospect of success and was inconsistent with its primary case. Furthermore, the lateness of the application, along with the potential prejudice to HMRC, weighed against granting permission.

Mypay was granted permission to rely on grounds 3 and 4 of its draft amended grounds of appeal.

HMRC did not oppose these amendments.

HMRC was directed to serve an amended statement of case removing reliance on Autoclenz.

To clarify the legal basis of their case and avoid further dispute.

MyPay Limited v The Commissioners for HMRC

Key Facts

Legal Principles

Outcomes

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