M R Currell Limited v The Commissioners for HMRC
Decision date: 12 July 2023
Neutral citation: [2023] UKFTT 613 (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 whether an £800,000 payment by M R Currell Ltd to an employee benefit trust (EBT), which the Trustee immediately lent interest‑free to director Mark Currell (MC), was earnings subject to PAYE and Class 1 NICs under s62 ITEPA. The tribunal held that a genuine repayable loan can, as a matter of law, constitute a taxable benefit, and on the facts the loan conferred a benefit and the substantial reason for the company’s payment was to reward MC for his services. The company’s appeal was dismissed and HMRC’s determinations 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: high
A genuine money loan with real repayment obligations can constitute a taxable “money’s worth” or benefit under s62 ITEPA; whether a payment is earnings depends on the substantial reason for the payment, assessed in light of surrounding events and commercial reality. Where a payment to an EBT is made substantially to enable trustees to make a loan to an employee and that loan confers a benefit, the original payment may be treated as earnings attributable to the employee’s services.
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 consequential tax outcomes (for example potential double taxation) do not determine whether the original payment was earnings. It also indicated that prior First‑tier Tribunal decisions do not establish a categorical rule that genuine repayable loans can never be earnings; factual distinctions are material.