Grand Smile Design Limited v The Commissioners for HMRC

Facts

The appellant, Grand Smile Design Limited, is a Surrey dental practice whose directors are Dr Thomas Keppel and his wife Dr Priyangika Suaris. In 2014 and 2015 both participated in the Qubic Gold Bullion Scheme, a disguised remuneration structure under which they undertook, by deeds of undertaking with Qubic Trustees Ltd as trustee of an employee benefit trust, to pay £500,000 and £250,000 respectively to the trust. When the loan charge in schedule 11 of the Finance (No 2) Act 2017 was introduced, taxing "quasi-loans" outstanding at the end of 5 April 2019, the couple took advice from Qubic and adopted the Qubic Loan Cleanse Scheme. In early April 2019 the trustee borrowed from Delta Multiplex Finance Limited, an associated company, to "buy" 32 shares in the appellant from Dr Keppel for £324,480; the same sum passed through solicitors and back to Delta within the day. Dr Keppel also paid £38,358.24, described as the trustee's lending fee, and £154,128 from other resources. HMRC issued a determination under regulation 80 of the Income Tax (Pay As You Earn) Regulations 2003 and decisions under section 8 of the Social Security Contributions (Transfer of Functions, etc) Act 1999, varied on review to income tax of £804,202.10 and NICs of £307,639.32 on a disputed balance of £386,838.24. The company appealed.