John Lowry v The Commissioners for HMRC
Decision date: 3 September 2026
Neutral citation: [2026] UKFTT 1279 (TC)
Overall AI summary confidence: high
Short overview
This short overview is intended to summarise the case, issues and outcome so far as they are supported by the judgment.
AI confidence in this short overview: high
This appeal challenged HMRC closure notices assessing large sums described as interest-free "loans" under the K2 Scheme as taxable. The tribunal found the payments were, in economic and commercial substance, remuneration and therefore "earnings" under s.62 ITEPA, and alternatively were caught by Part 7A; the appeal was dismissed and the closure notices upheld.
Ratio decidendi
This summary is intended to identify the ratio decidendi, meaning the legal reasons for deciding and the binding part of the decision.
AI confidence in this ratio decidendi summary: medium
Where a composite scheme delivers employees unfailing, immediate access to sums that in substance reward employment, those sums may be treated as "earnings" despite being legally labelled repayable loans; a purposive, reality-focused construction of s.62 (and alternatively Part 7A) supports treating such sums as employment income where genuine repayment is not a realistic prospect and the arrangement’s purpose is to obtain a tax advantage.
Obiter dicta
This summary is intended to identify obiter dicta, meaning observations made by the way that were not necessary to deciding the case and are not binding.
AI confidence in this obiter dicta summary: medium
The judgment comments that authorities such as Currell do not preclude treating loans as disguised remuneration where repayment obligations are not genuine and that tribunals should be cautious about relying on factual findings from other proceedings involving different parties; these observations are presented as persuasive guidance rather than binding ratio.