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
