Vision HR Solutions Limited, R (on the application of) v The Commissioners for HMRC
[2023] EWHC 1659 (Admin)
Payeworx Limited, R (on the application of) v The Commissioners for HMRC
8 November 2024
[2024] EWHC 2842 (Admin)
High Court
HMRC thought a company's payment structure might be avoiding tax and named them publicly. The court said HMRC had good reason to suspect tax avoidance, even if the structure didn't actually work, and that naming the company was fair.
Key Facts
- •Payeworx Ltd. provides workers to clients, with workers setting up personal service companies (PSCs) and receiving payments via an Isle of Man protected cell company (Contractor Buddy).
- •HMRC suspected tax avoidance due to a structure separating payments into a minimum wage salary (subject to PAYE) and larger dividends (tax-free).
- •HMRC published information about Payeworx under section 86(1) of the Finance Act 2022.
- •Payeworx challenged the publication on grounds of irrationality and violation of Article 1, First Protocol of the European Convention on Human Rights (A1P1).
Legal Principles
The test for suspicion under section 86(1) of the Finance Act 2022 is low, amounting to conjecture or surmise.
Shaaban bin Hussien v Chung Fook Kam [1970] AC 942
'Tax advantage' is broadly defined in section 234(3) of the Finance Act 2014, including deferral of tax payment.
Finance Act 2014, section 234(3)
Article 1, First Protocol of the European Convention on Human Rights protects possessions, which may include goodwill in the Strasbourg jurisprudence sense.
Ian Edgar (Liverpool) Ltd v. UK (application no. 37683/97); Wendenburg v. Germany (application no. 71630/01)
Proportionality of the statutory scheme under section 86 of the Finance Act 2022 has been upheld in previous cases.
R (Easyway Umbrella Ltd) v. HMRC [2023] EWHC 3368 (Admin)
Outcomes
Permission to bring judicial review was refused.
The court found the decision to publish information under section 86 was not irrational; the arrangements created suspicion of tax avoidance, even if the scheme ultimately failed to provide a tax advantage. The A1P1 claim was also found unarguable, as the statutory scheme was not disproportionate and there was no unusual or oppressive element in the exercise of the power.