The first-tier tribunal has dismissed a tax avoidance scheme whereby an IT contractor, Mr Philip Boyle was paid in the form of loans from an offshore company.
Philip Boyle argued that his contractor loan tax avoidance scheme worked and the money he had received was not taxable. He went on to explain that if he had received income from his employment, it should have been taxed under PAYE by the offshore company and that he should not have to pay. This was dismissed by the judge.
The judge also decided that even if the money Philip Boyle received under the scheme was no income from employment, he would still have to pay due to rules pertaining to the transfer of assets abroad.
HMRC said promoters sold contractor loan schemes with a variety of different features but they all “involved individuals signing an employment contract with an offshore company and receiving a large proportion of their income in the form of a ‘loan’ from their employer – either directly or through an intermediary”, in an update to its tax avoidance.