I am seeing a flurry of domicile enquiries (under the old rules). These things tend to come in waves and at the moment I am seeing an uptick in cases going through the tribunal process on this issue: Coller v HMRC [2023] UKFTT 212 (TC) and Strachan v HMRC [2023] UKFTT 617 (TC) are just two on which we have had decisions this year and there are others in the pipeline. I love the intricacy of domicile cases; you get to know the person and their family better than they know themselves.
If you could make one change to tax, what would it be?
We are probably at the point where we need a statutory test for employment status. As much as we counsel love fighting about whether someone is an employee or not, it does not serve businesses or individuals, who need some certainty about their workforce, rights, and tax position. I see employment status as a spectrum, with the self-employed business owner at one end, and the long-term employee at the other, with workers, professionals and everything else in between. The current common law test in Ready Mixed Concrete [1968] 2 QB 497 is too blunt an instrument and the way it is applied is too evaluative to serve anyone with any precision. The new statutory residence test and the domicile rules were a complete overhaul of the common law tests that existed before 2017 and, on the whole, I think they have been effective. There will be injustices but at least people can plan. The fact that we find ourselves fighting about exceptional circumstances (see the recent case of A Taxpayer, now known as HMRC v LMNO UT/2022/00073), or very specific parts of the definitions shows, in my view, that it has been broadly successful. We need something similar for employment status.
That said, the case of PGMOL v HMRC (in which I appeared for the taxpayers) was heard by the Supreme Court at the end of June. I am hopeful that the Supreme Court may try to inject some nuance and common sense into the employment status test, particularly with regard to the role and relevance of mutuality of obligation. Judgment is expected this autumn. Watch this space.
What development should we look out for later this year?
The mixed membership rules (MMR), contained in the ITTOIA 2005 s 850C look set to be the next big thing. I am aware of at least one new case involving a global consulting partnership in which HMRC have sought to apply the MMR. This new case (the decision is yet to be handed down and I can’t even mention the name) is set to be more complex than the case of Walewski v HMRC [2021] UKUT 133 (TCC), currently the only authority on MMR. It will be interesting as (from what I understand) it does not involve avoidance and considers Condition X (s 850C(2)) as well as Condition Y (s 850C(3)). The decision is expected in a couple of months. All I can say about it for now is that my colleague, Marika Lemos, appeared for the taxpayer, so watch the Devereux Chambers website for when the decision drops.
What do you know now that you wish you’d known at the start of your career?
I wish I had known how fun tax is! I would never have imagined that I would end up in this field or enjoy it so much: I was drawn more towards public law, employment and even crime at one point. But, fortunately for me, my chambers has three main practice areas, so I was exposed to tax from very early on. Lots of people underestimate the human element to tax: everyone has to pay their taxes so my clients have included everyone from builders to bankers, sports personalities to dentists. But you also get the academic side: there is nothing quite like crunching through statutory provisions to get to the right answer. My advice to young barristers would be not to write tax off.
And finally, you might not know this about me but...
I could’ve joined the circus! I used to do gymnastics to quite a high level and when representing Great Britain I was scouted to join a couple of circuses as a contortionist/acrobat. Sadly, I had to turn it down to do my GCSEs. But sport will always be my first love.
I am seeing a flurry of domicile enquiries (under the old rules). These things tend to come in waves and at the moment I am seeing an uptick in cases going through the tribunal process on this issue: Coller v HMRC [2023] UKFTT 212 (TC) and Strachan v HMRC [2023] UKFTT 617 (TC) are just two on which we have had decisions this year and there are others in the pipeline. I love the intricacy of domicile cases; you get to know the person and their family better than they know themselves.
If you could make one change to tax, what would it be?
We are probably at the point where we need a statutory test for employment status. As much as we counsel love fighting about whether someone is an employee or not, it does not serve businesses or individuals, who need some certainty about their workforce, rights, and tax position. I see employment status as a spectrum, with the self-employed business owner at one end, and the long-term employee at the other, with workers, professionals and everything else in between. The current common law test in Ready Mixed Concrete [1968] 2 QB 497 is too blunt an instrument and the way it is applied is too evaluative to serve anyone with any precision. The new statutory residence test and the domicile rules were a complete overhaul of the common law tests that existed before 2017 and, on the whole, I think they have been effective. There will be injustices but at least people can plan. The fact that we find ourselves fighting about exceptional circumstances (see the recent case of A Taxpayer, now known as HMRC v LMNO UT/2022/00073), or very specific parts of the definitions shows, in my view, that it has been broadly successful. We need something similar for employment status.
That said, the case of PGMOL v HMRC (in which I appeared for the taxpayers) was heard by the Supreme Court at the end of June. I am hopeful that the Supreme Court may try to inject some nuance and common sense into the employment status test, particularly with regard to the role and relevance of mutuality of obligation. Judgment is expected this autumn. Watch this space.
What development should we look out for later this year?
The mixed membership rules (MMR), contained in the ITTOIA 2005 s 850C look set to be the next big thing. I am aware of at least one new case involving a global consulting partnership in which HMRC have sought to apply the MMR. This new case (the decision is yet to be handed down and I can’t even mention the name) is set to be more complex than the case of Walewski v HMRC [2021] UKUT 133 (TCC), currently the only authority on MMR. It will be interesting as (from what I understand) it does not involve avoidance and considers Condition X (s 850C(2)) as well as Condition Y (s 850C(3)). The decision is expected in a couple of months. All I can say about it for now is that my colleague, Marika Lemos, appeared for the taxpayer, so watch the Devereux Chambers website for when the decision drops.
What do you know now that you wish you’d known at the start of your career?
I wish I had known how fun tax is! I would never have imagined that I would end up in this field or enjoy it so much: I was drawn more towards public law, employment and even crime at one point. But, fortunately for me, my chambers has three main practice areas, so I was exposed to tax from very early on. Lots of people underestimate the human element to tax: everyone has to pay their taxes so my clients have included everyone from builders to bankers, sports personalities to dentists. But you also get the academic side: there is nothing quite like crunching through statutory provisions to get to the right answer. My advice to young barristers would be not to write tax off.
And finally, you might not know this about me but...
I could’ve joined the circus! I used to do gymnastics to quite a high level and when representing Great Britain I was scouted to join a couple of circuses as a contortionist/acrobat. Sadly, I had to turn it down to do my GCSEs. But sport will always be my first love.
.tmb-editorspic.jpg?sfvrsn=df04ab27_1)
