[2025] UKUT 00278 (TCC)

Ms Robinson’s reasoning in the review decision is set out above at §40. She took the view that the disclosure provided did not explain how the arrangement worked, the amounts loaned, the recipients of the loans or a clear indication that an earnings charge should have been applied.

Her witness statement of 16 November 2023 went into more detail on how she had approached her decision and her thought process in reaching it. She explained that in practice what she was looking for to constitute reasonable disclosure was:

“information as to the amount of the loan, the date it was made, and to whom it was made, as well as the relevant arrangements under which the loan was made and any other information which would indicate that the sums paid were earnings liable to PAYE tax and NICs”.

She explained that she had rejected the repayment claim because there was no mention in the company accounts of how the arrangement worked, the amounts loaned or their recipients, nor was there a clear indication that a tax charge on employment income should have been applied such that PAYE tax and NICs might be due.

She disagreed with Fluid Scotland’s allegation that she had put the threshold too high, stating that she had been looking for a clear indication that an “earnings charge” should have been applied, because the tax concerned was made up of the PAYE and NICs that had been included in the settlement agreement. She noted that her use of the phrase “earnings charge” was her comment rather than part of the s. 20(5) test. Even without that reference, however, she said that her decision would still have been that there was no reasonable disclosure, as she saw “nothing that would indicate that PAYE and NICs were due”.

At the hearing, Ms Robinson was briefly cross-examined by Mr Goodfellow on the question of the test she had applied, based on her comments that she had been looking for a “clear indication” of liability to PAYE and NICs. We found Ms Robinson to be an honest and helpful witness. She candidly (and understandably) noted that given the passage of time since her review decision in December 2021, she could not recollect certain details of the points that she had considered in reaching that decision. She was nevertheless able to respond straightforwardly to the key questions put to her, accepting that she was looking for a “clear indication” in the material that she was looking at of “who the recipient of the loan was, the amount of the loan, how the scheme worked and a clear indication that tax is payable”; in those respects, she was looking for a “high degree of probability”; and that her reference in her decision to a lack of a “clear indication” that an earnings charge should have been applied was a reason for her refusing the claim and not just a comment.

We accept that evidence, noting its consistency with the terms of Ms Robinson’s decision letter and the factual statements in her witness statement. With these findings in mind, we will now consider whether Fluid Scotland’s claim that HMRC erred in its conclusion on “reasonable disclosure” is made out.