Consultancy payments to a company and partnership, where each such ‘consultancy vehicle’ was operated by a director of the appellant paying company, were liable to PAYE income tax and National Insurance contributions on the basis that the payments were for services as directors of the appellant, under contracts of service.  
 
The appellant company carried on a business of running two petrol stations. Its directors were not paid any remuneration directly by the appellant. The directors and their spouses owned between them all the shares in the appellant in equal shares (i.e. 25% each). There were no written contracts between the appellant and the directors other than agreements (called ‘consultancy agreements’) entered into in 1999 (the ‘1999 contracts’).  
 
The 1999 contracts did not define the type of services to be provided. There were two contracts. One contract was