Not so Smart(pay)?

There are (at least) two companies called Smartpay. One in the UK and the other in the Isle of Man. Both are associated with the “informal group” that includes AML.

HMRC considered that the contractor loan scheme they ran separately or jointly should be registered as tax avoidance under the DOTAS rules. The Tribunal has agreed here ([2022] UKFTT 146).

Users of the schemes (including Optima Employed) run by these companies, can now expect HMRC to issue APNs (demands for disputed tax). Defending APNs in Court has largely failed. There are however  strategies available to manage the payment of the demands.

The best defence remains showing that there is no liability and that means litigation on any years under enquiry. This is already in hand by WTT.

HMRC has not yet acted to send APNs in respect of three earlier Tribunal victories involving Curzon Capital and the ISH Marketing LLP arrangement; Hyrax Resourcing, Peak Performance arrangement; AML. The latter is very recent but the former date to 2019.

What is clear however is that HMRC knows very much more about the structure of the promoters behind many of the contractor schemes than they have previously admitted. It means that denials from the agency as an excuse for taking no action are no longer credible.

This is the third decision against AML and/or its known connections, this year. We also know that two Tribunal actions were abandoned by AML Tax (IOM) Ltd, leaving eight lead cases and more than 50 “joined” individuals at risk of having their appeals struck out. Resisting what we consider to be unlawful demands from HMRC following a strike out, is very difficult. (We have in fact prevented this action to date).

WTT is aware of media speculation that links certain individuals to AML (and therefore Smartpay). In the absence of hard evidence, we cannot (and do not) draw inferences. There is however clearly a “controlling mind” able to authorise third party legal costs and appoint advocates to defend actions taken by companies in this “informal group”. We continue to seek that person(s) in order to bring some order to our clients’ position.

In the meantime, we expect to see a wave of APNs soon and given the track record of AML and its associates so far, have no faith or confidence that any mitigation or defence can be relied upon from that source.