Richard Bates v The Commissioners for HMRC
Decision date: 5 August 2026
Neutral citation: [2026] UKFTT 1135 (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 concerned a discovery assessment of £20,716.40 for 2010–11 arising from Mr Bates' use of the Darwinpay contractor loan scheme. The tribunal found the £69,029.78 paid by the Darwinpay Trust were, in substance, unconditional payments of remuneration (earnings) funded from client fees and not genuine loans, and that HMRC made a valid discovery on 10 September 2013 and issued a timely discovery assessment on 18 October 2013. Mr Bates' challenges that he was overcharged or would suffer double taxation were not made out or fell outside the tribunal's jurisdiction. The appeal was dismissed.
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: high
Payments described as loans but funded from employer/client fees, written off in trust accounts and made without any realistic expectation of repayment can properly be characterised as earnings (employment income) for tax purposes; and a valid discovery under TMA s29 can be established by proving on the balance of probabilities that an HMRC officer formed a concluded belief of an insufficiency of tax and that such belief was one a reasonable officer could form.
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 tribunal noted that, even if payments had been genuine loans, arrangements that redirect salary to a third party can still give rise to an immediate income tax charge equal to the redirected amount; and that HMRC need not always call or identify the individual officer who made the discovery so long as it proves on the balance of probabilities that an officer formed the requisite belief.