Double Taxation Treaty – contractor appeal

The Court of Appeal has handed down its judgment in the case of Huitson v HMRC. This case concerned a contractor claimant who was arguing that the Treasury’s retrospective change to the taxation of foreign partnerships was an infringement of his Human Rights.

Mr Huitson lived in the UK but provided his IT services through an Isle of Man partnership as part of a tax avoidance scheme. In 2005 legislation relating to their tax treatment of such schemes was amended with the provisions applied retrospectively meaning that Mr Huitson had a tax bill of in excess of £100,000.00. The court had to decide whether the retrospective change to the tax legislation met a fair balance between the interests of the community and an individual’s rights. The court was unanimous in ruling that it lay with the community and that the High Court’s judgment that the measures were compatible with human rights could stand. It now seems likely that the contractor will have to pay the £100,000 tax bill.

Should the Court look behind the contracts to determine employment status?
Amendments to the Agency Workers Regulations 2010