The Commissioners for HMRC v Hamilton Bradbury Ltd (in liquidation)
Decision date: 2 February 2023
Neutral citation: [2023] UKFTT 99 (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
HMRC applied under FA 2004 s314A that Hamilton Bradbury Ltd’s arrangements, which routed most worker earnings through employment, loan contracts and standardised invoicing so that workers received net pay while larger amounts were labelled loans, were notifiable. The Tribunal held the arrangements met the 2006 Regulations’ prescribed descriptions of a “premium fee” (reg 8) and “standardised tax products” (reg 10), found the arrangements’ main benefit was reduction of income tax and NICs, and held HBL to be a promoter. The Tribunal ordered the arrangements to be notifiable for income tax and NICs; the decision is an excluded decision with no right of appeal.
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
The Tribunal’s ratio is that arrangements which channel most earnings through loan mechanisms using standardised documentation and centralised invoicing/payment flows can meet the reg 8 premium-fee and reg 10 standardised-tax-product descriptions, and that where a person organises those invoicing and payment flows critical to the scheme they can be a promoter under s307. It also found that such arrangements can enable a tax/NICs reduction that is the main benefit within s306(1)(b)–(c).
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 as persuasive facts that users expected the loans would not be repaid and that there were no attempts to call loans, supporting the practical unreality of the loan element as indicative of a tax-driven arrangement. It also observed that the objective test for the premium-fee hallmark focuses on whether a hypothetical promoter could obtain a fee, not on the actual promoter’s individual circumstances.