On 19 March 2026, the Upper Tribunal (‘UT’) released its decision in the case of L Rowland & Co (Retail) Ltd v HMRC [2026] UKUT 00130 (TCC). The decision concerns the FTT’s approach to case management directions regarding witness evidence and raises important strategic considerations for taxpayers. A copy can be found here: Rowland_v_HMRC_Final_Decisison_for_release_to_the_parties.pdf
The underlying FTT appeal concerns whether around 1400 locum pharmacists were employed or self-employed for the purposes of PAYE and National Insurance (HMRC having issued Regulation 80 Determinations and Section 8 Decisions with a total value of c.£16M. A further £12M is at issue in subsequent tax years).
The taxpayer provided witness statements for only two locums. HMRC had wanted to interview and obtain documents from locums during the inquiry stage, but the taxpayer refused to give HMRC access and suggested that they would seek judicial review and an interim injunction if HMRC approached the locums. HMRC therefore decided not to proceed with this strategy, which (as HMRC went on to acknowledge) in turn meant that they were unable to fully plead their case.
The FTT directed each party to name five locums as witnesses to form a ‘sample’ and that if the taxpayer would not call the witnesses voluntarily, the FTT would issue witness summonses. The FTT directed HMRC to then provide ‘further and better particulars’ on the issue of whether a relationship of employment existed between each locum and the taxpayer, in all the relevant circumstances.
The taxpayer appealed to the UT on the grounds that the FTT had no jurisdiction to require a party to call evidence from a particular witness (‘Ground 1’) and that even if the FTT had such jurisdiction, the FTT had exercised its discretion incorrectly (‘Ground 2’). The UT allowed the appeal on Ground 2, deciding that the FTT can call additional witnesses on its own initiative, but that it should do so very sparingly, especially in proceedings akin to a commercial case where both parties are well-represented. The UT decided that the FTT had not acted neutrally, but had undermined the principle of ‘party autonomy’—it encroached upon the strategic choices of the parties by effectively allowing witnesses to be cross-examined by HMRC which the taxpayer did not wish to call.
The UT also said that the FTT had erred in its further and better particulars direction because it reversed the usual order of witness evidence coming after pleadings, effectively allowing HMRC to unfairly delay the completion of their pleadings and prevent the taxpayer from being fully aware of HMRC’s case / knowing which witnesses to select. This also made it impossible for the taxpayer (and the FTT) to know whether any sample would be representative. The UT’s view was that HMRC ought to know what their case is, having issued high value ‘best judgment’ assessments concluding that all the locums were employees, and that “HMRC are not entitled to use the tribunal litigation process to discover what their case will be”.
HMRC have now been directed to produce further and better particulars within 28 days of the decision i.e. without sight of the witness evidence that they had hoped for, in a case where such evidence is critical. The UT did not accept that the taxpayer’s threat of judicial review was a good reason for HMRC’s failure to try and interview the locums or apply for summonses in respect of them.
The UT also highlighted risks for the taxpayer, including: (1) HMRC could argue that the taxpayer had only established the position in relation to two locums, proving nothing about the employment status of the other 1,398 (i.e. the appeal could be dismissed in relation to the majority of the assessments); (2) HMRC could invite the FTT to draw adverse inferences from the taxpayer’s failure to call witnesses.
If you have a dispute with HMRC which involves any of the issues referred to above and would like to discuss how we might be able to assist you, please contact:
- Iain MacWhannell, Partner in our Tax Disputes Team:
https://uk.jha.com/our-people/profile/iain-macwhannell
imw@jha.com
+44 (0)20 7851 8888
- Julia Glukhikh, Associate:
https://uk.jha.com/our-people/profile/julia-glukhikh
Julia.Glukhikh@jha.com
+44 (0)20 7851 8888
- Thomas Hemming, Associate:
https://uk.jha.com/our-people/profile/thomas-hemming
Thomas.Hemming@jha.com
+44 (0)20 7851 8888
From 6 April 2026, amendments to the CIS legislation will enable HMRC to adopt a stricter approach against CIS scheme businesses that engage with other businesses involved in the alleged fraudulent evasion of tax.
This follows previous measures in 2021 to tackle abuse of the CIS and VAT lost from supply chain fraud, and 2024 legislation regarding Gross Payment Status (‘GPS’) tests. HMRC’s policy paper on the latest changes can be found here: Tackling Construction Industry Scheme fraud - GOV.UK
The legislation will be amended to introduce a Kittel-style test so that where it can be shown that a business ‘knew or should have known’ that they entered into a transaction connected with the fraudulent evasion of tax, the following may occur:
The time limit for reapplication following immediate cancellation of GPS will also increase from one to five years. Other grounds for immediate GPS cancellation include where a business has:
Next steps
Businesses operating within the CIS should be aware of these changes and conduct due diligence on their supply chains.
JHA&B have considerable expertise in successfully resolving tax disputes, especially involving HMRC’s application of Kittel, where HMRC have alleged fraud or that a business ‘knew or should have known’ that they entered into a transaction connected with the fraudulent evasion of tax.
If you have a dispute with HMRC concerning any of the issues mentioned above and would like us to assist, please contact:
HMRC is consulting on proposals that would, for the first time, require individuals and trusts to notify HMRC when they adopt an uncertain tax treatment (“UTT”) that confers a tax advantage.
All individuals and all trusts will fall within the UTT regime, without any turnover, balance sheet or “wealth” threshold albeit a notification would only be required where the tax advantage exceeds £5 million.
The current proposals will extend the UTT regime beyond income tax to also include:
This increases the likelihood that complex transactions such as asset restructurings, trust appointments, property transactions or succession planning could fall within scope.
Since April 2022, the UTT regime has required certain large companies and partnerships to notify HMRC when they have adopted a UTT in relation to Corporation Tax, VAT or Income Tax (including PAYE).
Under the current UTT regime, an uncertain treatment is defined by two triggers and notification is required where: (i) one or both of the statutory triggers are met, (ii) the tax advantage exceeds £5 million and (iii) no exemption applies.
The existing statutory triggers are:
In addition to the existing triggers, HMRC proposes a new notification trigger where:
This is particularly relevant for individuals and trusts, where planning often relies on areas of law that are technically uncertain but not directly addressed in HMRC guidance. Where a trust holds assets through a company or partnership, the notification obligation would arise only if the trust itself adopts an uncertain legal interpretation. This may be difficult to apply in practice, particularly for employee benefit trusts and other sponsored arrangements.
Currently, no notification is required if it is reasonable to conclude that HMRC already has all relevant information. HMRC proposes to tighten this exemption so that individuals and trustees would need explicit confirmation from HMRC that it is aware of the uncertainty.
This change would significantly reduce reliance on informal disclosures made through correspondence, returns or enquiries, and may encourage earlier and more formal engagement with HMRC. It may be wise to engage proactively with HMRC where uncertainty arises, with a view to obtaining the confirmation needed.
Although the £5 million threshold limits the scope, the proposals would require individuals and trustees to:
HMRC acknowledges that this will increase compliance obligations, even where HMRC ultimately agrees with the taxpayer’s position.
The present consultation closes on 4 June 2026, with HMRC’s response expected later in the summer. Those likely to be affected may wish to consider responding to the consultation, particularly on the practical and administrative challenges. Any legislation would be introduced in the next Finance Bill and would apply to returns filed from 1 April in the following tax year.
1 Linked to the Sept 2025 Guideline for Compliance GfC13
On 19 March 2026, the Upper Tribunal (‘UT’) released its decision in the case of L Rowland & Co (Retail) Ltd v HMRC [2026] UKUT 00130 (TCC). The decision concerns the FTT’s approach to case management directions regarding witness evidence and raises important strategic considerations for taxpayers. A copy can be found here: Rowland_v_HMRC_Final_Decisison_for_release_to_the_parties.pdf
The underlying FTT appeal concerns whether around 1400 locum pharmacists were employed or self-employed for the purposes of PAYE and National Insurance (HMRC having issued Regulation 80 Determinations and Section 8 Decisions with a total value of c.£16M. A further £12M is at issue in subsequent tax years).
The taxpayer provided witness statements for only two locums. HMRC had wanted to interview and obtain documents from locums during the inquiry stage, but the taxpayer refused to give HMRC access and suggested that they would seek judicial review and an interim injunction if HMRC approached the locums. HMRC therefore decided not to proceed with this strategy, which (as HMRC went on to acknowledge) in turn meant that they were unable to fully plead their case.
The FTT directed each party to name five locums as witnesses to form a ‘sample’ and that if the taxpayer would not call the witnesses voluntarily, the FTT would issue witness summonses. The FTT directed HMRC to then provide ‘further and better particulars’ on the issue of whether a relationship of employment existed between each locum and the taxpayer, in all the relevant circumstances.
The taxpayer appealed to the UT on the grounds that the FTT had no jurisdiction to require a party to call evidence from a particular witness (‘Ground 1’) and that even if the FTT had such jurisdiction, the FTT had exercised its discretion incorrectly (‘Ground 2’). The UT allowed the appeal on Ground 2, deciding that the FTT can call additional witnesses on its own initiative, but that it should do so very sparingly, especially in proceedings akin to a commercial case where both parties are well-represented. The UT decided that the FTT had not acted neutrally, but had undermined the principle of ‘party autonomy’—it encroached upon the strategic choices of the parties by effectively allowing witnesses to be cross-examined by HMRC which the taxpayer did not wish to call.
The UT also said that the FTT had erred in its further and better particulars direction because it reversed the usual order of witness evidence coming after pleadings, effectively allowing HMRC to unfairly delay the completion of their pleadings and prevent the taxpayer from being fully aware of HMRC’s case / knowing which witnesses to select. This also made it impossible for the taxpayer (and the FTT) to know whether any sample would be representative. The UT’s view was that HMRC ought to know what their case is, having issued high value ‘best judgment’ assessments concluding that all the locums were employees, and that “HMRC are not entitled to use the tribunal litigation process to discover what their case will be”.
HMRC have now been directed to produce further and better particulars within 28 days of the decision i.e. without sight of the witness evidence that they had hoped for, in a case where such evidence is critical. The UT did not accept that the taxpayer’s threat of judicial review was a good reason for HMRC’s failure to try and interview the locums or apply for summonses in respect of them.
The UT also highlighted risks for the taxpayer, including: (1) HMRC could argue that the taxpayer had only established the position in relation to two locums, proving nothing about the employment status of the other 1,398 (i.e. the appeal could be dismissed in relation to the majority of the assessments); (2) HMRC could invite the FTT to draw adverse inferences from the taxpayer’s failure to call witnesses.
If you have a dispute with HMRC which involves any of the issues referred to above and would like to discuss how we might be able to assist you, please contact:
- Iain MacWhannell, Partner in our Tax Disputes Team:
https://uk.jha.com/our-people/profile/iain-macwhannell
imw@jha.com
+44 (0)20 7851 8888
- Julia Glukhikh, Associate:
https://uk.jha.com/our-people/profile/julia-glukhikh
Julia.Glukhikh@jha.com
+44 (0)20 7851 8888
- Thomas Hemming, Associate:
https://uk.jha.com/our-people/profile/thomas-hemming
Thomas.Hemming@jha.com
+44 (0)20 7851 8888
From 6 April 2026, amendments to the CIS legislation will enable HMRC to adopt a stricter approach against CIS scheme businesses that engage with other businesses involved in the alleged fraudulent evasion of tax.
This follows previous measures in 2021 to tackle abuse of the CIS and VAT lost from supply chain fraud, and 2024 legislation regarding Gross Payment Status (‘GPS’) tests. HMRC’s policy paper on the latest changes can be found here: Tackling Construction Industry Scheme fraud - GOV.UK
The legislation will be amended to introduce a Kittel-style test so that where it can be shown that a business ‘knew or should have known’ that they entered into a transaction connected with the fraudulent evasion of tax, the following may occur:
The time limit for reapplication following immediate cancellation of GPS will also increase from one to five years. Other grounds for immediate GPS cancellation include where a business has:
Next steps
Businesses operating within the CIS should be aware of these changes and conduct due diligence on their supply chains.
JHA&B have considerable expertise in successfully resolving tax disputes, especially involving HMRC’s application of Kittel, where HMRC have alleged fraud or that a business ‘knew or should have known’ that they entered into a transaction connected with the fraudulent evasion of tax.
If you have a dispute with HMRC concerning any of the issues mentioned above and would like us to assist, please contact:
HMRC is consulting on proposals that would, for the first time, require individuals and trusts to notify HMRC when they adopt an uncertain tax treatment (“UTT”) that confers a tax advantage.
All individuals and all trusts will fall within the UTT regime, without any turnover, balance sheet or “wealth” threshold albeit a notification would only be required where the tax advantage exceeds £5 million.
The current proposals will extend the UTT regime beyond income tax to also include:
This increases the likelihood that complex transactions such as asset restructurings, trust appointments, property transactions or succession planning could fall within scope.
Since April 2022, the UTT regime has required certain large companies and partnerships to notify HMRC when they have adopted a UTT in relation to Corporation Tax, VAT or Income Tax (including PAYE).
Under the current UTT regime, an uncertain treatment is defined by two triggers and notification is required where: (i) one or both of the statutory triggers are met, (ii) the tax advantage exceeds £5 million and (iii) no exemption applies.
The existing statutory triggers are:
In addition to the existing triggers, HMRC proposes a new notification trigger where:
This is particularly relevant for individuals and trusts, where planning often relies on areas of law that are technically uncertain but not directly addressed in HMRC guidance. Where a trust holds assets through a company or partnership, the notification obligation would arise only if the trust itself adopts an uncertain legal interpretation. This may be difficult to apply in practice, particularly for employee benefit trusts and other sponsored arrangements.
Currently, no notification is required if it is reasonable to conclude that HMRC already has all relevant information. HMRC proposes to tighten this exemption so that individuals and trustees would need explicit confirmation from HMRC that it is aware of the uncertainty.
This change would significantly reduce reliance on informal disclosures made through correspondence, returns or enquiries, and may encourage earlier and more formal engagement with HMRC. It may be wise to engage proactively with HMRC where uncertainty arises, with a view to obtaining the confirmation needed.
Although the £5 million threshold limits the scope, the proposals would require individuals and trustees to:
HMRC acknowledges that this will increase compliance obligations, even where HMRC ultimately agrees with the taxpayer’s position.
The present consultation closes on 4 June 2026, with HMRC’s response expected later in the summer. Those likely to be affected may wish to consider responding to the consultation, particularly on the practical and administrative challenges. Any legislation would be introduced in the next Finance Bill and would apply to returns filed from 1 April in the following tax year.
1 Linked to the Sept 2025 Guideline for Compliance GfC13
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