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Rowlands Pharmacy has won its appeal against a decision by the first-tier tax tribunal (FTT) that would have required it to put forward locum pharmacists as witnesses to be cross-examined by HMRC. 

In a judgment handed down yesterday, judge Anne Fairpo said the FTT had erred in making a June 2024 decision that directed both Rowlands and HMRC to name five locum pharmacists as witnesses in a future appeal against the tax agency’s retrospective classification of locum pharmacists as employees rather than self-employed. 

The FTT had made this decision in order to ensure that the proceedings would have sufficient evidence from locums who had worked for the multiple.  

Rowlands had previously provided two witness statements from locum pharmacists, and had sought to prevent HMRC from interviewing more locums on the basis this would have been an abuse of power, said judge Fairpo.

Judge Fairpo ruled that the FTT had “erred in law” in its decision to direct both parties to put forward five locums, which Rowlands argued “contravenes the principle of party autonomy”. 

She said the FTT went “beyond being the neutral arbiter in adversarial proceedings, even though it was doing so on the basis of attempting to define the scope of the evidence it considered it needed to fairly determine the appeal”.

She set aside the FTT’s directions, and instead directed HMRC to provide “further and better particulars of their case” and told Rowlands to file its reply to these within 28 days. 

The underlying dispute between Rowlands and HMRC centres on the employment status of approximately 1,400 locum pharmacists engaged by the chain between 2015 and 2018.

HMRC is not contesting the self-employed status of locum pharmacists who worked for 40 days or fewer for Rowlands in any of the relevant tax years, or those who worked up to 115 days in a tax year for whom this amounted to less than half their total self-employed income for that year.  

“Some £16 million is in dispute in the years 2015/16 to 2017/18,” said judge Fairpo, “with a further £12 million at issue in subsequent tax years which are standing behind”.

A spokesperson for Rowlands told P3pharmacy: “Rowlands Pharmacy can confirm that its appeal in relation to the tax tribunal’s direction regarding locum witnesses has been successful. The judgement relates to a procedural matter within the wider case concerning the employment status of locum pharmacists.

“As this is part of ongoing legal proceedings, it would not be appropriate to comment further at this stage.”