Taxpayers had no arguable grounds for appeal

Wired Orthodontics (WO) established an employee benefits trust (EBT) and undertook to contribute £300 000 worth of gold bullion. The directors immediately sold the bullion they had been awarded and used the proceeds to discharge the company’s payment obligation. This created corresponding credits in the directors’ loan accounts which they later drew on when the company had profits to make cash payments to them. In addition the directors agreed to take on WO’s obligation to pay £300 000 into the trust.

The general anti-abuse rule advisory panel concluded that the arrangements were ‘abnormal and contrived’.

HMRC concluded the gold bullion constituted ‘money or money’s worth’ and formed part of the directors’ earnings in relation to their employment (ITEPA 2003 s 62). The directors argued that the arrangements were loans rather than earnings because the award of the bullion and/or the money from the sale of the bullion was received...