UT (Tax & Chancery) UT/2023/000098 - [2024] UKUT 00404 (TCC)

Mr Waldegrave submitted that the FTT had made a finding that the Payment to the Trustee was a payment of MC’s earnings; the FTT was entitled to do so based on the evidence before it. It is clear from Rangers SC that such Payment is taxable notwithstanding that it was paid by the Appellant to the Trustee and not directly to MC. The subsequent Loan, ie what happened downstream, is irrelevant.

If HMRC are wrong on this and the Appellant is correct that the FTT found that the Loan (not the Payment) was earnings, then HMRC’s position is that the Loan was a loan of MC’s earnings. The earnings were not paid outright but were lent to him. There was no error of law.

We should beware of the risk of artificial dissection of the transactions which had taken place; there was a single sum of £800,000 which was paid by the Appellant to the Trustee and then to MC. The FTT found that this sum was a reward for MC’s services as a director; it does not matter for this purpose that there was no direct payment from the Appellant to MC.