Split contract scheme was a notifiable arrangement

HMRC applied to the First-tier Tribunal for an order that arrangements were notifiable under the disclosure of tax avoidance schemes (DOTAS) regime.

Under the scheme the director of a user company split their services between fiduciary duties and consultancy services. The director then contracted with the promoter – AML Contracts - to supply their consultancy services to the promoter which in turn contracted with the company to provide those services. The company paid the director for the fiduciary services. The company entered into a contract with the promoter who would provide the services of the director on a self-employed basis. The director was paid a small retainer for those services and received an unsecured loan from an Isle of Man trust.

The First-tier Tribunal considered first whether the arrangements provided a tax advantage and whether that advantage was a main benefit expected to arise from them. The judge said...