The scheme, in question, was marketed by consulting Overseas Limited to independent contractors as a remuneration package. The idea was that it would save them considerable amounts in relation to both income tax and national insurance contributions.
To allow for tax avoidance, the contractors signed up as employees of the Isle of Man Company Sandfield consultants Ltd. They then agreed to accept two thirds of their income as loans in Romanian lei, Byelorussional roubles or Uzbekistani soums. They then entered into currency trades that were meant to turn this income into non-taxable foreign exchange gains.
The judge held that the loans where in both substance and reality income from his employment. The judge further went on to state that Mr Boyle had no need for such loans and the exchange rate was artificial. No evidence has ever been given to show that the foreign currency, in question, ever existed. There where 348 users of this particular scheme. 226 have settled with HMRC repaying approximately £5million. HMRC is continuing to pursue the others involved in the scheme.
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