The Upper Tribunal was correct to conclude that the First-tier Tribunal made an error of law in arriving at its conclusion that payments made under a ‘remuneration trust’ arrangement for the benefit of a company’s sole shareholder and director were not taxable as earnings from employment or under the ‘disguised remuneration’ provisions. 

The appellant company (MDPL) operated a dental practice in which its sole shareholder and director (MT) provided his dental services. MDPL established a ‘remuneration trust’ (RT) which was stated to be for the benefit, broadly, of persons who had provided or might in the future, provide services, custom or products to MDPL. Contributions were made by MDPL to the RT to “reflect part of the economic cost to [MDPL] of earning its profits.” For each relevant accounting period, MDPL: (a) deducted the contributions as business expenses in computing its profits for accounting