Although the Rangers decision can mean that income tax is payable in respect of contractor loan schemes, there remains a question of whether the contractor is ultimately liable to pay the tax. In Hoey, the Upper Tribunal would have found that he was not, but it concluded it did not have jurisdiction to do so. It rejected HMRC’s alternative argument that there was a liability under the transfer of assets abroad code, as the consequence of payments being a person’s income is that they are deductible in computing the employer’s profits. This was relevant, as on the facts there was no EU law defence to a charge applying.
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Although the Rangers decision can mean that income tax is payable in respect of contractor loan schemes, there remains a question of whether the contractor is ultimately liable to pay the tax. In Hoey, the Upper Tribunal would have found that he was not, but it concluded it did not have jurisdiction to do so. It rejected HMRC’s alternative argument that there was a liability under the transfer of assets abroad code, as the consequence of payments being a person’s income is that they are deductible in computing the employer’s profits. This was relevant, as on the facts there was no EU law defence to a charge applying.
If you or your firm subscribes to Taxjournal.com, please click the login box below:
If you do not subscribe but are a registered user, please enter your details in the following boxes:
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