NuGen Properties

CITB claims final victory in Hudson Contract levy battle

The argument comes down to what is a construction company.

The Construction Industry Training Board (CITB) has always said that Hudson Contract should pay the statutory training levy because it employs, or has employed – employment rules have changed over the course of the battle – thousands of construction workers.

Hudson Contract, which turned over £1.5bn last year managing the books of self-employed construction workers, contends that is not an employer in the construction industry because neither it nor its direct employees carry out any actual construction work, and nor does it take any construction risk. Therefore it is outside the scope of the levy.

Hudson Contract Services Ltd is being chased by the Construction Industry Training Board for £27,403,993 for three years of unpaid levy contributions from between April 2015 to March 2018.

In a counter-claim Hudson Contract argued that if it is within the scope of the CITB levy, then it is entitled to £28.1m in CITB grants.

As the dispute went legal, Hudson Contract restructured. Hudson Contract Services Ltd, the main trading business, became a subsidiary of Hudson Contract Ltd in 2018.

The £1.2bn turnover in Hudson Contract Services’ turnover for the financial year 2018 was not there in the following year’s accounts. Hudson Contract Ltd, meanwhile, has seen its turnover grow from £1.2bn to £1.5bn over the past five years. It made £11.5m profit before tax last year and paid out £9.1m in dividends to shareholders Mr & Mrs David Jackson.

Having insisted they were not builders for years, in November 2020 David Jackson changed the name of Hudson Contract Services, now little more than a shell, to Knot Builders Ltd.  Liability for the levy now rests with Knot Builders, whose accounts show a that it is owed £8,464,230 – the amount of CITB grant that it is claiming for 2015/16.

After many legal exchanges, the case reached judicial review in March 2023. Judgment has now been handed down.

The court rejected two of the three grounds raised by Knot Builders Limited (KBL) for judicial review. In dismissing these primary issues, judge Naomi Ellenbogen referred to ‘fanciful and opportunistic’ submissions by KBL, and to the ‘cynicism’ of certain arguments advanced.

The Construction Industry Training Board issued a statement saying: “CITB is the custodian of the construction industry levy and must ensure any funding derived from the levy is available to those employers that qualify. It is therefore vitally important that CITB applies a fair, consistent, and level playing field in the way levy is collected and funding distributed.

“KBL’s continued attempts to avoid its levy liability and then to claim £28m of grant in a claim that has been substantively dismissed has resulted in three years of litigation at the expense of the industry. The funding protected by CITB by this ruling will enable CITB to further invest to support the construction industry to have a skilled, competent and inclusive workforce now and in the future.”

Hudson Contract managing director Ian Anfield retorted: “KBL’s dispute with the ineffective, outdated and incredibly unpopular CITB grant and levy scheme started in 2015 and unfortunately it is not over yet.

“Having read the CITB press release, if the CITB are so happy with this latest judgement, it begs the question as to why they felt the need to appeal? And as self-proclaimed custodians of levy payer’s money, why are they throwing money at lawyers and London PR firms instead of focussing on training?

“The CITB should be far more concerned about what levy payers think about the board’s failure to have any meaningful impact on skills, and far less interested in publicising and perpetuating their disputes with KBL.”

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