Offshore group member did not exercise control

The taxpayer was a UK company which was part of a group headed by a US corporation. It provided catering and hospitality services to offshore installations in the North Sea and as part its contracts was required to supply personnel goods and equipment including food and housekeeping materials.

From 2004 it did this using resources supplied to it by a non-UK group member (OSI). Under the agreement between the taxpayer and OSI the employees it had used previously were transferred to OSI. The intention was to eliminate the cost of secondary class 1 National Insurance.

HMRC considered that the taxpayer was liable to class 1 National Insurance by virtue of the host employer provisions in Social Security (Categorisation of Earners) Regulations SI 1978/1689 Sch 3 para 9 (as they applied before 6 April 2014).

The First-tier Tribunal said the purpose of the...