Hoey (claimant/appellant) & ors v Her Majesty’s Revenue & Customs (defendant/respondent)
Monday 28 March – Friday 1 April 2022
Appeal against the Order of Andrews J (as she then was) (23/4/20) that refused a renewed application for permission to apply for judicial review.
Mr Hoey and the other claimants were parties to contractor loan schemes, which are a species of the type of tax avoidance arrangement referred to by HMRC as ‘disguised remuneration schemes’. Individuals would be employed as a contractor by an umbrella company based offshore to carry out work for, or provide services to, one or more clients known as ‘end users’. The commercial advantage in such arrangements from the perspective of the end user is that that person would not have the individual on their payroll. They would therefore not normally expect to have to make payments to HMRC in respect of PAYE and National Insurance contributions for that individual. Instead of that, the end user would pay a sum of money in respect of the contractor’s services to the offshore entity which employs the contractor. This would sometimes be done via one or more intermediaries who advertised the schemes who, in common with the offshore entity, would deduct fees or administrative expenses. The offshore entity would pay the individual concerned a minimal salary and account to HMRC for income tax and national insurance contributions on that salary. It would then make top-up payments into an Employee Benefit Trust (“EBT”) which would be used to fund interest-free loans to the individual. The loans were, in practice, not expected to be called in. Although the loans, and the payments which funded them, formed part of the contractor’s remuneration in real economic terms, no income tax or national insurance on those sums was ever accounted for by the contractor or, indeed, by anybody else.