Payments to individuals in respect of spread betting avoidance arrangements were liable to PAYE income tax and National Insurance contributions.    

The appellant company and its director shareholders participated in ‘spread bet’ and related option arrangements in the tax year 2012/13. The arrangements (known as the ‘Alchemy scheme’) broadly involved an individual user (typically a company director or key employee) entering into a spread bet contract with a financial bookmaker (H), to which the appellant made payments. The bet related to the performance of a basket of hedge funds over a given period. The user would also enter into a hedging contract (commonly a call spread option (CSO)). The outcome of the CSO was dependent on the performance of the same basket of hedge funds, but in reverse. The user would invite his employer (or sometimes an employee benefit trust) to relieve him of