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Discovery assessments in respect of contractor EBT loan arrangements upheld

By Mark McLaughlin, October 2019

Discovery assessments relating to avoidance scheme arrangements involving loans to the appellant IT contractor from employee benefit trusts were upheld and HMRC was entitled to exercise its discretion to disapply the PAYE regulations and transfer the effective burden of paying the tax to the appellant.    
 
The appellant, an IT specialist, participated in a marketed tax avoidance scheme, the aim of which was to avoid tax on earnings by the provision of loans from an employee benefit trust (EBT) to scheme users, instead of earnings. The end-users of the appellant’s services did not wish to take on additional employees for relatively short-term contracts. The appellant, therefore, had to provide his services either as an independent consultant or through a company. 
 
The appellant began working for a company during 2007/08. In September 2009, he transferred his employment to a Guernsey-based

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