My thanks to a loyal reader who pointed out a couple of things about HMRC's relationship with PA Consulting.
PA Consulting has had a commercial relationship with HMRC, eg between April 2003 and June 2005 HMRC paid PA Consulting over £20M.
PA Consulting Group have been involved in a tax avoidance litigation case with HMRC for many years, which is now on its way to Supreme Court. Contractor Calculator quotes James Abbott, tax partner at contractor accountant Abbott Moore:
"In the 1990s, management consulting firm PA Consulting decided that it would pay its employees bonuses using dividends, so they could deliberately avoid Pay As You Earn (PAYE) income tax and National Insurance Contributions (NICs).HMRC challenged the scheme via the tax commissioners, and then the courts, contending that the payments to PA Consulting’s employees were ‘earnings’ and should be taxed accordingly.
The firm set up an elaborate tax structure, allowing it to route bonus payments through a separate offshore company with multiple share classes and pay dividends to the employees, instead of bonuses as part of their PAYE pay packet.”
The case continues.
"Curiouser and curiouser!" said Alice.
Comments and views always welcome.
Tax does have to be taxing.
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