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Industrial Tribunals Northern Ireland Decisions

You are here: BAILII >> Databases >> Industrial Tribunals Northern Ireland Decisions >> SDE Decorators Ltd v Construction Industry Training Board [2006] NIIT 1247_06 (13 December 2006)
URL: http://www.bailii.org/nie/cases/NIIT/2006/1247_06.html
Cite as: [2006] NIIT 1247_06, [2006] NIIT 1247_6

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THE INDUSTRIAL TRIBUNALS

CASE REF: 1247/06

CLAIMANT: SDE Decorators Ltd

RESPONDENT: Construction Industry Training Board

DECISION

The unanimous decision of the tribunal is that the appeal is dismissed.

Constitution of Tribunal:

Chairman: Ms M Sheehan

Members: Mr McKenna

Mr Kinnear

Appearances:

The claimant was represented by their accountant Mr Daniel Walsh of Daniel G Walsh & Company.

The respondent was represented by Mr J Coyle, Barrister at Law, instructed by Babington & Croasdaile, Solicitors.

The claimant was appealing against a levy imposed by the respondent under the Industrial Tribunal (Northern Ireland) Order 1984. The claimant's appeal was that he disputed the amount of the levy, as the amount was an additional assessment in respect of sub-contractors employed by him but whom he alleged should be levied in their own name. He complained that the details had been provided to the respondent of these sub-contractors but no action had been taken to pursue them by the respondent. The respondent contended that the levy as assessed was properly due.

Sources of Evidence

The tribunal received a bundle of documents and authorities from the respondent. The tribunal heard evidence from Mr Walsh, accountant for the claimant, Ms Amanda Stevenson and Ms Annette McCann. It was not in dispute that the claimant's business activities brought it within the statutory scheme. The level at which the levy was claimed for the years 2003 to 2005 was in dispute.

Issues

The issue for the tribunal to determine was whether the respondent could lawfully demand payment of the levy from the claimant for persons employed by him as sub-contractors, during the years 2003 to 2005.

The facts

The claimant's business is the obtaining of decorating contracts and arranging to sub-contract the work out to labour only sub-contractors who carry out the work for a fixed sum. The claimant employs only two persons. The claimant has been in business for 13 years, but has been a limited company for the last four years. The claimant had been making annual returns to the respondent. The respondent, in accordance with its own procedures, sought to carry out an audit of the claimant in March 2006. Every business registered with the respondent as subject to this levy is audited every three years. The audit is carried out by assessing the levy on the basis of the annual returns made by the claimant to the Inland Revenue. A substantial difference was identified in the amounts paid by the claimant to sub-contractors in the Inland Revenue returns as opposed to the annual returns submitted to the respondent. An additional assessment was made in respect of the years 2003 to 2005 amounting in total to £8,598.39.

The claimant advised the respondent that the discrepancy between the returns to the Inland Revenue and the detail of their annual returns arose because no details of earnings had been included in the return in respect of sub-contractors whom the claimant viewed as being required to be a levy payer in their own right. Details of those sub-contractors were not provided to the respondent until April 2006 by the claimant.

The respondent on receipt of this information checked its records to ascertain whether any of the persons named on the list provided by the claimant were already levy payers. One firm was identified. The other firms were placed on the respondent's pre-registration list and an investigation is ongoing to ascertain whether or not they are within the scope of the relevant legislation. The levy assessed to be paid by the claimant reflects the removal of the one firm who is already a levy payer in their own right. The other sub-contractors will if found to fall within scope of the legislation be registered from the April 2006 date. The claimant will be credited in respect of any levy paid in respect of those found to fall within scope from that date. However the additional levy remains due from the claimant as it is based on the payment figures provided by the claimant to the Inland Revenue, which is the basis of the calculation made by the respondent as prescribed by statute.

The respondent employs 50 staff for the whole of Northern Ireland. The respondent has approximately 5,000 registered firms and 2,500 being full levy payers. The administration of the respondent is divided into five areas of responsibility one of which is Levy. There are three persons working in that section. The respondent has only a fifty percent return rate on annual return forms from those subject to the levy within the whole of Northern Ireland. The audit in 2006 was part of the standard tri-annual audit carried out by the respondent, on a rotational basis, for the various areas of Northern Ireland.

There are a number of ways that the respondent becomes aware of people in the construction industry who appear to be within the scope of the relevant legislation. Sometimes it occurs where an employee of the respondent, while carrying out duties in a particular area, comes across a business that fits the requirements of the legislation. On other occasions it is by persons providing information as part of the annual return.

The claimant could have provided this information on sub-contractors who should be levy payers in their own right at an earlier date to the respondent. The annual return form for the years at issue contained a section headlined Part 8. The purpose of the section is stated to be "to advise us (the respondent) of employers within the construction industry who you feel should be registered and who do not currently appear in the enclosed Alphabetical Listing. Please supply full names and addresses. If you employ labour only sub-contractors who are not levy payers, you are liable to pay levy on all payments made to them".

Applicable law

The respondent is a creature of statute created for the purpose of providing or securing courses or other facilities for the training of persons employed in or intending to be employed in the construction industry. The essential relevant legislation is the Industrial Training (Northern Ireland) Order 1984 in particular Articles 23 and 24, the Industrial Training Levy (Construction Industry) Order (Northern Ireland) 2003, the Industrial Training Levy (Construction Industry) Order (Northern Ireland) 2004 and the Industrial Training Levy (Construction Industry) Order (Northern Ireland) 2005. The tribunal took cognisance of the decision, of the current Lord Chief Justice Kerr, in the Matter of an Application for Judicial Review by HSS Hire Service Group PLC in July 2001, which confirmed that the respondent is fixed with a statutory obligation to collect the levy from those who are liable to pay it. The amount of the levy is regulated by statute, in this instance, the respective Orders made in 2003, 2004 and 2005 referred to above and in particular Articles 1, 2, 3, 4 and 5 of the aforesaid Orders.

Conclusions in light of the facts and law

These statutory provisions do not allow remission of the levy to be given to any employer, like the claimant, who satisfies the prescribed statutory conditions. The decision by Kerr LJ is clear authority to be followed by this tribunal that the amount to be levied is established by the relevant Industrial Training Levy (Construction Industry) Order for any particular year. The respondent is fixed with a statutory obligation to collect the levy from those who are liable to pay it.

Article 2 of the annual Levy Orders, in particular Article 2(3) and 2(5) prescribe the amount of the levy based on the relevant earnings "paid and payable to in respect of all persons employed by the employer at or from that establishment". Article 1 of the same Order defines "earnings" as including "payments made under a contract of service or otherwise than under a contract". This clearly encompasses the payments made by the claimant to sub-contractors who were not levy payers themselves.

The tribunal in determining whether the respondent acted lawfully in assessing an additional levy on foot of an audit carried out every three years as a matter of policy on all registered businesses took cognisance of the authorities listed by Carswell LCJ in Re Human Rights Commission's Application [2001] unreported, referred to at Page 16 of the decision in the HSS case referred to above. This tribunal is satisfied that while there is no express provision permitting the respondent to audit its assessments, the power to audit the amount of the levy must be regarded as incidental to the express powers conferred in the 2003 Order and the other annual Orders.

Article 3 of the 2003 Order permits the respondent to serve an assessment notice on every employer assessed to the levy but "one notice may comprise two or more assessments." The respondent in this case issued three assessment notices on the 23 March 2006 in respect of the levy periods 39, 40 and 41 respectively. Article 4 of the relevant Levy Orders states that subject to the provisions of Article 5 and 6, "the amount of each assessment appearing in an assessment notice … shall be due and payable to the Board in two instalments and the said instalments shall be due respectively..". The dates specified in the relevant Levy Orders relate to October and February of each assessment year.

Articles 5 and 6 deal with the timing of payment where an assessment is withdrawn or appealed. Article 5 (2) permits the withdrawal of an assessment "without prejudice to the power … to serve a further assessment notice in respect of any establishment to which that assessment related". Article 4(3) and 6 make it clear that no payment is due until the assessment has been served and the time allowed for appeal, namely one month from the date of service of the assessment notice has expired. It appeared to this tribunal that when these provisions were all read together that although there was no express provision permitting the respondent to issue further assessment notices for levy ascertained to be due on foot of an audit carried out on a three yearly cycle, such a power could be "regarded as incidental to or consequential upon those things, which the legislature has authorised": Selborne LC in Attorney General v Great Eastern Railway Co (1880) 5 App Cas 473 at 478. It appeared to this tribunal that the provisions of Article 5(2) in particular supported this conclusion.

The respondent created the three yearly audit cycle; clearly to match business needs with available resources in carrying out its duty to raise the levy. It appeared to the tribunal that the creation of a process to address the sourcing of relevant information, required by the respondent, to effect its obligations under the statute must fall into the same category as that of the implied power to estimate assessments for exactly the same reason as that given in the HSS decision by Lord Justice Kerr at Page 16, "It cannot be the case that the collection of the levy could be frustrated by the refusal of employers to complete return forms". This claimant could have disclosed the details of those sub-contractors, whom he unilaterally removed from the details of earnings provided on the annual return, despite the clear instruction given on Part 8 of the annual return form when he chose to submit his annual return for the three years at issue. The tribunal drew support for these conclusions from the description of the assessment function accepted by the Court, in the HSS case as "not concerned with the imposition of the levy but rather with its collection". Accordingly the claimant's appeal is dismissed.

Chairman:

Date and place of hearing: 13 December 2006, Belfast

Date decision recorded in register and issued to parties:

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