Sums paid to an offshore employee benefit trust and loaned to the appellant as part of a contractor loan scheme were taxable as employment income, and discovery assessments were upheld. 

The appellant was the user of a ‘contractor loan scheme’. The scheme ostensibly worked by converting what would otherwise be employment income into loans from an offshore trust. As part of his employment with an offshore employer company (ECL), the appellant was remunerated for the services supplied by him to an end user via intermediaries. That remuneration was then paid to the appellant by way of a combination of salary and loan payments. The theory was that such loans would not be taxable as employment income. 

On 20 November 2013, HM Revenue and Customs (HMRC) made a discovery assessment (under TMA 1970, s 29(1)) for the tax year 2009/10 in