TC09660 - [2025] UKFTT 01226 (TC)

This decision deals with HMRC’s application (“the strike out application”) dated 26 September 2024 to strike out the appellant’s appeal against the conclusions reached by HMRC and reflected in a final closure notice dated 15 September 2023, in which they concluded that the appellant’s employment income for the tax year 2010/2011 had been understated by £43,899 (“the closure notice”). Additional income tax of £9,753.60 is therefore due.

It is HMRC’s view that the appellant participated in a “contractor loan” scheme pursuant to which the appellant was remunerated for the services which were actually supplied to an end user via intermediaries; and that remuneration was paid by way of a combination of salary and loan. Tax and national insurance contributions have been paid on the salary element but not on the loan element. HMRC say that the entirety of the sums received by the appellant is taxable on the basis that payments made by the end user to an intermediary and then by way of a loan to the appellant constitute redirected earnings.

In their view, too, the appellant’s grounds of appeal do not bring the appellant within the jurisdiction of the tribunal. Alternatively, the appellant’s case has no reasonable prospects of success.

The appellant does not seriously challenge his involvement with the scheme nor the manner in which he was remunerated for the services which he supplied to the end user. It is his view (in a nutshell) that he received advice that the scheme was both legitimate and effective, and that it is wholly wrong that HMRC, having opened an enquiry in 2012 should have taken so long to have concluded it. Furthermore, he cannot understand why HMRC encouraged him to bring an appeal yet now say that the grounds of that appeal are unmeritorious.

I have considerable sympathy with the appellant’s position. However, for the reasons given later in this decision, I have granted the strike out application.

The relevant law is set out in the Appendix. Words and phrases defined therein bear the same meanings in the body of this decision.