Judgment summary
This is an appeal against a decision of the First-tier Tribunal (FTT), released on 12 September 2024, concerning arrangements intended to avoid a liability of Aramark Limited to secondary Class 1 national insurance contributions (NICs) (1). The FTT held that the arrangements did not achieve that objective (1).
Aramark supplied catering and hotel services to operators of offshore installations on the UK continental shelf (2). From 8 October 2004 to 11 March 2017, Aramark used resources supplied by Aramark US Offshore Services LLC (OSI), a US company without UK residence or presence, under an Intercompany Agreement dated 1 June 2005 (4, 5). HMRC contended that the personal services of OSI's employees were 'made available' to Aramark within the meaning of paragraph 9, Schedule 3, Social Security (Categorisation of Earners) Regulations 1978, making Aramark liable for secondary Class 1 NICs of £6,830,899 (plus statutory interest) for the period 6 August 2011 to 5 April 2014 (6).
The Upper Tribunal considered whether it should depart from its own recent decision in Bilfinger Salamis UK Limited v HMRC [2026] UKUT 143 (TCC), which held that the host employer provision does not require the host to exercise any control over the seconded employees (8, 24). The Tribunal declined to depart from Bilfinger, finding it was not 'convinced' or 'satisfied' that the decision was wrongly decided (80).
The Tribunal also considered, in case its Issue 1 conclusion was wrong on appeal, whether the FTT's factual finding that Aramark exercised the necessary day-to-day control over OSI's employees was open to it on an Edwards v Bairstow basis. The Tribunal found no such error (96).
The appeal was dismissed (98).
Background
Aramark is a member of a group supplying food, facilities and uniform services, whose parent is Aramark Corporation, a US corporation (2). Aramark's business includes catering and hospitality services to operators of offshore installations in the North Sea on the UK continental shelf (2).
Pursuant to Operator Contracts, Aramark was required to provide skilled personnel, tangible goods and equipment representing hotel and catering services to Operators' staff (FTT [3], quoted at 4). From 8 October 2004 until 11 March 2017, Aramark met some of these commitments using resources supplied by OSI under the Intercompany Agreement dated 1 June 2005, under which employees previously used by Aramark were transferred to OSI (4).
The Intercompany Agreement was entered into as part of arrangements intended to keep Aramark competitive by eliminating the cost of secondary Class 1 NICs, on the basis that OSI, lacking UK residence or presence, would not be liable to pay such contributions and did not make the personal service of its employees available to Aramark (5). It was common ground that OSI was not liable to pay secondary Class 1 NICs while the arrangements had effect (5).
HMRC's decision related to the period 6 August 2011 to 5 April 2014, statutory time limits precluding earlier assessment, and legislative changes led Aramark to accept liability for secondary Class 1 NICs from 6 April 2014 (6). The FTT made detailed findings of fact, including that OSI was 'little more than a contractual shell', that its employees were in substance 'seconded' to Aramark, and that Aramark exercised substantive day-to-day control over the Crew through documents such as the Offshore Manual (FTT [161], [163], [166], [167], [168]).
Core dispute
The issue was whether Aramark was correctly assessed to secondary Class 1 NICs under paragraph 9, Schedule 3 to the 1978 Regulations (the 'host employer provision'), which turned on the meaning of 'made available' and whether personal service was 'rendered' for the purposes of the host employer's business (7, 22).
Aramark appealed on three grounds: that control by the host was required for both limbs of paragraph 9(a) and (b) (Ground 1); that the FTT should have found the Intercompany Agreement was a contract for a complete or composite service outside the provision's scope (Ground 2); and that the FTT erred on an Edwards v Bairstow basis in finding Aramark exercised the necessary control and that the employees were seconded to it (Ground 3) (25).
HMRC's primary position, relying on the Upper Tribunal's intervening decision in Bilfinger Salamis UK Limited v HMRC [2026] UKUT 143 (TCC), was that no control by the host employer is required at all under the host employer provision, so the appeal should be dismissed on that different basis; alternatively, if control was required, the FTT was correct that Aramark exercised it (26).
This produced two issues before the Upper Tribunal: Issue 1, whether it should depart from Bilfinger (if not, the appeal necessarily failed); and Issue 2, if it did depart from Bilfinger, whether the FTT's factual conclusion that Aramark had the requisite control was open to it (27).
Court findings
On Issue 1, the Tribunal held that as a matter of judicial comity it would only depart from its own earlier decision in Bilfinger if 'convinced' or 'satisfied' that decision was wrong, or, in other words, that it was 'manifestly wrong' (35, 38). The Tribunal considered and rejected each of Aramark's arguments: that 'made available' inherently connotes control (44); that subsequent 2014 legislative amendments indicated an ambiguity resolvable in Aramark's favour (47, 50); that the Explanatory Note to the 1994 Regulations, referring to 'secondment', supported a control requirement (57, 59); that the words 'for the host employer' in paragraph 9(c) implied a control requirement (62, 63); that the ejusdem generis principle applied to limit s7(2) SSCBA (67, 68); that the absence of 'control' language in paragraph 9, contrasted with paragraph 2 of Schedule 3, supported Aramark's construction (72); and that the interpretation in Bilfinger could not rationally exclude ordinary commercial subcontracting arrangements (78).
The Tribunal concluded it was not convinced or satisfied that Bilfinger was wrongly decided (80). It held that the FTT had erred in law in finding that some degree of control was necessary for the host employer provision to apply, but that this error was immaterial because there was no realistic possibility the FTT would have reached a different conclusion, applying the test in Degorce v HMRC [2018] 4 WLR 79 at [95] (81, 83).
On Issue 2, applying the principles in Re Sprintroom Ltd [2019] EWCA Civ 932 at [76] and JTI Acquisition Co v HMRC [2024] EWCA Civ 652 at [71], the Tribunal found no identifiable flaw, gap in logic, inconsistency or failure to take account of a material fact in the FTT's evaluative conclusion that Aramark, rather than OSI, exercised day-to-day control over the Crew, and that the Intercompany Agreement was not a contract for a complete or composite service (92, 93, 96).
Outcome
The appeal was dismissed (98). The Tribunal found against Aramark on Issue 1, holding that it was not satisfied that Bilfinger was wrongly decided, meaning the FTT's error of law (requiring control) was immaterial and its outcome stood: the host employer provision applied throughout the relevant period and Aramark was correctly assessed to secondary Class 1 NICs (81, 83).
On Issue 2, considered in case Issue 1 was successfully appealed, the Tribunal also found against Aramark, holding that the FTT's conclusions on control and on the absence of a complete/composite service contract were open to it on the evidence (96, 97).
Major issues / areas of contention
- Whether the phrase 'made available' in paragraph 9, Schedule 3 to the Social Security (Categorisation of Earners) Regulations 1978 requires the host employer to exercise control over the seconded employees.
- Whether the Upper Tribunal should depart from its own recent decision in Bilfinger Salamis UK Limited v HMRC [2026] UKUT 143 (TCC) on the meaning of the host employer provision.
- Whether subsequent 2014 legislative amendments and the associated anti-avoidance provisions could be used as an aid to construing the earlier version of paragraph 9.
- Whether the Explanatory Note to the 1994 Regulations, referring to 'secondment', assisted in interpreting the scope of the host employer provision.
- Whether the ejusdem generis principle limited the scope of the Secretary of State's regulation-making power under s7(2) SSCBA.
- Whether the Intercompany Agreement between Aramark and OSI constituted a contract for a 'complete' or 'composite service' falling outside the host employer provision.
- Whether the FTT erred, on an Edwards v Bairstow basis, in concluding that Aramark rather than OSI exercised day-to-day control over the offshore Crew.