TC09681 - [2025] UKFTT 01333 (TC)

It is necessary to set out the relevant legislation in some detail to understand what is meant by “promoter” and by “notifiable arrangement”. The legislation requires the reader to work through a number of definitions, applying those to the relevant facts, before returning to consider whether there are “notifiable arrangements” as defined in Section 306 FA 2004, and whether Moir is a “promoter” as defined in Section 307 FA 2004.

The starting point is Section 307 FA 2004, which provides:

Thus there must be “notifiable arrangements” or a “notifiable proposal”, for a person to be a “promoter” in relation to them. The meaning of “notifiable arrangements” and “notifiable proposal” is set out in Section 306 which provides:

The Tax Avoidance Schemes (Prescribed Description of Arrangements) Regulations 2006/1543 were made under the power in Section 306(1) FA 2004, and came into force from 1 August 2006. Regulation 5 sets out the arrangements which are prescribed. It provides:

Therefore, if the arrangements under consideration here fall within any one of the descriptions specified, they will be “notifiable arrangements”. HMRC argue that the provisions of Regulations 8, 10 and 18 apply to the arrangements here.

Regulation 8 provides:

Regulation 8 is widely drafted so either a promotor or a person connected with a promoter would be able to obtain a premium fee. A premium fee is a fee that is attributable to, or contingent upon, an advantage in relation to any tax that might be expected as a main benefit of the arrangements.

I consider first whether an advantage in relation to tax might be expected as a main benefit from the arrangements. HMRC submit that this is the case, and point to Moir’s admission that there is an “incidental” tax advantage to the annuity model arrangements.

As HMRC note, Moir have accepted that some tax advantage was intended to be obtained from the annuity solution. Given emails such as Moir’s email of 2 May 2018 to Individual SH (set out above) it would be extremely difficult for Moir to deny that any advantage in relation to tax might be expected from the arrangements.

In their correspondence of 27 February 2023 to HMRC, Moir set out what they argue is the purpose of the arrangements:

I have considered Moir’s argument that the “real purpose of the arrangements” was to provide a cash-flow advantage for individuals. However, I have been unable to find any reference to such purpose in the correspondence between Moir and individuals in the bundle. If enhanced cash-flow was the main purpose of Moir’s annuity solution then it is peculiar that Moir did not mention this to individuals when explaining how their arrangements worked. In addition, having considered the bank statements showing the dates on which individuals were paid under the annuity solution, it is difficult to see what Moir thought was the cash-flow advantage gained by any of the individuals who used the annuity solution model. As Moir explained in its email of 2 May 2018 to Individual SH:

An arrangement which resulted in payment of a small amount on one day but with a delay of a further working day for payment of a larger amount, would not have resulted in a cash-flow advantage. Having to wait a further working day would not have assisted any individuals who were on the “breadline”. While those individuals would receive a larger amount overall (because Jarvis did not deduct the tax that would have been required to be deducted if the second payment had been accepted to be salary) the delay in receiving the majority of the sum due would disadvantage any individual worker who required “cashflow assistance”.

Having considered all of the documents in the bundle, and the many references by Moir to acting “in the most tax efficient way possible” and being able to use “tax relief” to maximise the percentage of the gross salary that was retained by an individual, I am satisfied that one of the main benefits (if not the main benefit) that might be expected to arise from the annuity arrangements set out above was the obtaining of a tax advantage.

I look now at whether there was a “premium fee”, that is a fee which was attributable to, or contingent upon, the tax advantage that I am satisfied was expected to be brought about by the annuity arrangements. In HMRC v Hyrax Resourcing Ltd & Ors [2019] UKFTT 63 (TC), Judge Mosedale stated:

HMRC argue in their submissions that Moir (or Jarvis) was able to take 12-14% of the amounts paid through the arrangements, and that this percentage is “economically equivalent to a fee”. I agree with HMRC that a percentage payment is equivalent to a fee payment, and that what is relevant is whether Moir or Jarvis is able to earn an amount economically the same as a premium fee which is attributable to the intended tax advantage or contingent upon the obtaining of that tax advantage.

In their correspondence of 27 February 2025 to HMRC, Moir state:

Although Moir appear shocked by HMRC’s suggestion that individual CMN paid a fee of 12%, the illustrations that Moir provided to individuals, detailed above, show that Jarvis proposed deducting a management fee of 13.75% to individual SE and a fee (for management and insurance combined) of approximately 14.33% for individual SH, and of approximately 15% for individual CKC.

Moir has referred to a fixed fee of £26 being insufficient to cover its overheads. This fee appears in the three Moir payslip illustrations provided to individual JE, apparently to illustrate the traditional PAYE model, and two payslips for individual CKC which Moir provided as enclosures to its letter to HMRC dated 27 February 2023. Towards the end of the bundle there are also payslips for KM, LB and EA-S, who were employees of Moir. Those payslips demonstrate Moir’s traditional PAYE model rather than the annuity model operated via Jarvis.

In respect of the annuity model, there are no payslips or illustrations which show a fixed fee (of £26 or otherwise). Jarvis was entitled to charge its fee for the annuity arrangements as a percentage of the gross fee for the individual’s services payable by the end-client. However, I am satisfied that a percentage fee which was as large as 13.75% of gross fee for services was possible under the annuity model only because such a small amount of tax had been deducted from the two payments made to the individuals. Realistically, no prospective individual user of Moir’s traditional umbrella model would have agreed that Moir should deduct 13.75% of their gross salary as payment for Moir’s services, in addition to the deduction of tax and NICs.

In Hyrax, Judge Mosedale also stated:

I reach a similar conclusion here: Moir and/or Jarvis split the expected tax saving with the individual user. I am satisfied that the percentage fee which Jarvis deducted was attributable to (or contingent upon) the tax advantage expected to be brought about by the annuity solution offered by Moir.

The final part of Regulation 8 to consider is whether Moir or Jarvis could expect to obtain a premium fee “from a person experienced in receiving services of the type being provided”. All of the individuals who used the annuity model did, in fact, pay the significantly higher percentage fee for use of that model, and so I am satisfied such a fee could be expected to be obtained from persons using Moir and/or Jarvis for the umbrella arrangements.

Therefore, I am satisfied that there was a premium fee, and that Regulation 8 applies to the arrangements under consideration here.

Having reached this conclusion, it is not strictly necessary to consider Regulation 10 or 18, and so I touch upon each of these only briefly.

Regulation 10 provides:

In making their submissions, HMRC have argued that the FTT should consider the four stage test set out in Hyrax which summarises Regulation 10:

HMRC’s submission is that the answer to each of these questions is yes. In its letter of 27 February 2023, Moir accepts that the arrangements used standard template contracts of employment, but it says that this was due to efficiency and to avoid discrimination. Having seen the documents in the bundle for nine sample individuals, I am satisfied that the documents used by both Jarvis and Moir were standardised, that the form of these documents was determined by Moir and/or Jarvis, that the documents did not need to be tailored to any material extent, and that the purpose of this standardisation was to enable Moir and Jarvis to implement the arrangements.

I have already concluded that a main purpose of the arrangements is to enable a person to obtain a tax advantage. I am satisfied that Regulation 10 applies to the arrangements under consideration here.

For the avoid of doubt, I have not ignored the fact that Regulation 10 is subject to Regulation 11. Although Moir has not argued that any of the exceptions in Regulation 11 apply, I have nevertheless considered Regulation 11, and I am satisfied that Regulation 11 does not apply to except the arrangements here from falling within Regulation 10.

Regulation 18 provides:

Condition 1 involves the taking of a step. Moir appears to accept that this condition is met, and I am satisfied that this condition was satisfied when Jarvis entered into transactions and made payments to relevant individuals.

Condition 2 is met if one of the main benefits is that an amount that would otherwise count as employment income under section 554Z2(1), is reduced or eliminated. While Moir has denied that a main benefit of the arrangements is the reduction of employment income, I do not agree. As Moir explained to individual JE on 1 April 2019:

I do not accept that individuals using the annuity model arrangements would agree to take a small “basic salary” unless they were satisfied that a large part of the remainder of the gross fees for their services would also be paid to them after that remainder of those fees had supposedly been converted into another form of payment. I am satisfied a main benefit of the arrangements is the reduction of employment income.

HMRC argue that Condition 3 is not met as none of the exclusions in Sections 554E to 554XA apply. This aspect is not addressed by Moir. I am satisfied that HMRC are correct in their submissions, that Chapter 2 of Part 7A does apply and so Condition 3 is not met.

That is sufficient for Regulation 18 to apply.

If the arrangements that are the subject of this application are within any of Regulation 8, 10 or 18, then they are “notifiable arrangements”. I am satisfied all three of Regulations 8, 10 and 18 apply to the arrangements here. Having satisfied myself that the arrangements that are the subject of this application are “notifiable arrangements”, I can now return to Section 307 to consider whether Moir was a “promoter”.

Moir has denied that it meets any of the conditions in Section 307(1)(a), and so denies that it is a promoter. Moir has not addressed Section 307(1)(b). I agree with HMRC that Section 307(1)(b)(ii) applies as, in the course of its business, Moir made the arrangements under consideration available for implementation and also organised and managed those arrangements.

For Section 307(1)(b)(ii) to apply, Moir’s business must be a “relevant business”, and so it must be a business which involves the provision “of services relating to taxation”. HMRC’s submissions in this regard are the Moir’s services relate to taxation because Moir gives advice about the tax advantages of entering into its arrangements. I agree. I am satisfied that a service providing arrangements that structure employment income payments in a particular way in the expectation of obtaining a tax advantage from that structure, is a service relating to taxation.

In addition, I have noted the declaration that individuals were required to sign on entering the annuity arrangements, which stated:

This declaration also required an individual who received an enquiry letter from HMRC to notify that enquiry to Jarvis within 48 hours, and to use Jarvis’s advisers to provide that’s individual’s “defence”. Although that declaration was part of the agreements signed with Jarvis, once HMRC had begun their investigations some of the individuals who had engaged with Jarvis then contacted Moir. Moir advised Individual CKC that it had “a competent team of compliance and tax specialists who determine the best course of action”. I am satisfied, from the remarkably similar wording that unrelated individuals used in their responses to HMRC’s enquiries, that Moir provided advice to those individuals on the response that should be given. Advice on how to respond to an enquiry by HMRC could not be anything other than a service relating to taxation.

After that lengthy consideration, I decide answer issue 1 in favour of HMRC. I am satisfied that Moir was a “promoter” of “notifiable arrangements” as defined by sections 306 and 307 FA 2004.