Hoey Court of Appeal Judgement

WTT yesterday held a webinar for clients on the outcome of the above case in the Court of Appeal, released last Friday. This followed an open and productive discussion with Mr Hoey’s legal team and our own to establish an agreed view.

Mr Hoey’s assertion was that he was an employee of an offshore company, working for a UK end client and that the end client had a prima facie legal obligation to deduct tax from payments made in respect of his service. Were that to be correct he was entitled to a credit against his admitted liability regardless of whether the tax had been paid or not.

HMRC opposed this position stating that they could, retrospectively, turn off the obligations of the end client. If correct this would mean that no PAYE credit was available leaving Mr Hoey with a liability that he accepted would arise under the principles agreed in Rangers in an earlier Supreme Court decision in July 2017.

The FTT and UTT had decided that the matter was one of whether PAYE was due which in turn was a matter of collection (rather than liability or assessment) and was outwith their jurisdiction. The CoA however was clear that HMRC had the power claimed and denied the credit. They did however very comprehensively reject all of HMRC’s claims regards the use of Transfer of Assets Abroad legislation which HMRC claimed should be applied in priority.

The value of HMRC’s win here is perhaps limited. The CoA was clear that their judgement applied to Mr Hoey’s own circumstances given that the discretion to turn off PAYE can be given only in individual cases and only if certain conditions are met in line with their internal unpublished policy. We suggest that if HMRC try to apply this widely, we will see hundreds, perhaps thousands of cases being taken via separate Judicial Reviews, given the route to FTT is blocked, as above.

The judgement is generally considered to create further complexity for HMRC. The precise application of the judgement to Mr Hoey’s facts and the need to consider and issue a s684 discretion notice in every case is certainly not a decision that gives them free rein to seek collection on the 61,000 enquiries they claim are outstanding. 

Mr Hoey’s solicitors have plans for an appeal to the Supreme Court and we will continue discussions with them and our Counsel. Updates will be provided in due course.