Bilfinger Salamis UK Limited v The Commissioners for HMRC

The expression “made available” in paragraph 9 of Schedule 3 to the Social Security (Categorisation of Earners) Regulations 1978 bears its ordinary meaning. It does not require the host employer to possess a power of direction or control over the worker. Direction may be relevant evidence, but it is not part of the statutory test. The tribunal must instead ask, in a real and practical sense, whether the worker’s personal service was made available to the host employer and rendered for that employer’s business. A scheme involving interrelated steps must be considered as a whole. An error of law by the First-tier Tribunal need not result in its decision being set aside where the error was immaterial and could not realistically have affected the outcome.

Bilfinger UK appealed against the decision of the First-tier Tribunal, released on 16 August 2024, which held that an offshore employment structure did not avoid Bilfinger UK’s liability for secondary Class 1 national insurance contributions. Employees had been transferred to a Guernsey subsidiary, which supplied labour and equipment to Bilfinger UK. Bilfinger UK supplied industrial services to Marathon, with no contract between Marathon and the Guernsey subsidiary.

The issue was whether the employees’ personal service was “made available” to Bilfinger UK and rendered for the purposes of Bilfinger UK’s business under paragraph 9 of Schedule 3 to the Social Security (Categorisation of Earners) Regulations 1978, and whether the FTT’s error in construing that provision was material.

1. The appeal was dismissed. The FTT had reached the correct outcome: paragraph 9 of Schedule 3 applied and Bilfinger UK was correctly assessed for secondary Class 1 NICs.
2. Under section 7(2) of the Social Security (Contributions and Benefits) Act 1992, the Secretary of State had a wide discretion to prescribe cases in which a person was to be treated as the secondary contributor. The statutory language, rather than an assumed policy directed only at secondments or anti-avoidance, governed the construction of paragraph 9.
3. The expressions “personal service”, “made available” and “rendered for the purposes of the business” were ordinary words. “Made available” did not imply that the host employer had to possess a power to direct how the service was performed. Direction could be a relevant factor on the facts, but it was not an additional statutory requirement. The court should not replace the statutory language with proxies such as “secondment”, “secondment-like arrangement”, approximation to employment, management or control.
4. The scheme had to be assessed as a whole and as intended to operate. The FTT had found that, viewed realistically, the employees’ personal service was made available and rendered to Bilfinger UK for its business. Its additional requirement for some degree of host-employer direction was an error of law, but the findings necessarily satisfied the correct test. There was no realistic possibility that the FTT would have reached a different conclusion, so the error was immaterial under section 12(2)(a) of the Tribunals, Courts and Enforcement Act 2007.

• Upper Tribunal (Tax and Chancery Chamber): appeal from the FTT decision released on 16 August 2024, [2024] UKFTT 736 (TC). The FTT’s reasoning contained an error of law, but its conclusion and assessment were upheld because the error was immaterial.