Boyle’s law: Offshore contractor scheme

These schemes have been about for some years. The general idea is that you bind yourself to work as an employee of an offshore company (which you don’t control) which in turn provides your services to the “real” user of your services. You are paid a small salary (on which you pay tax) but the bulk of your reward comes in the form of a purported “loan” on which (if all goes according to plan) you don’t pay tax. In the more egregious examples of the scheme, the loan is denominated in some exotic soft currency.

We’ve never thought that this type of scheme works. Sadly for Mr Philip Boyle, the First-tier Tax Tribunal didn’t think so either and upheld HMRC’s assessments totalling something over £100,000. Interest is likely to increase the bill by close to 50%.

HMRC had alternative grounds of challenge. They won on them all. But perhaps the most interesting one was under the “transfer of assets abroad” legislation. This is the law which provides – broadly – that if you “transfer assets” to someone overseas on terms that you retain “power to enjoy” the income arising to the transferee, you remain liable to tax on the income. It was established a long time ago that entering into an employment contract is capable of being a “transfer of assets”; and of course the loan represented effective enjoyment of the income: so the conclusion that the legislation applies is an easy one to reach, accounting for just 3 paragraphs of the decision. Frankly, it’s difficult to see how any of the Counsel who signed off on the schemes missed such an obvious point: perhaps they weren’t asked the question.

For users of these schemes, settlement with HMRC on the best terms available is looking like a sensible option – see this archived article. For help in doing so or for advice or guidance please get in touch with your usual BKL contact partner.



Sam Inkersole

In 2022, Sam won the Taxation’s Rising Star award at the Taxation Awards in and was named in the Accountancy Age 35 Under 35.

Jon Wedge

While Jon’s client work focuses on the financial services sector, he also oversees the firm’s assurance service, as well as supporting the trainees following in his footsteps.


Elana joined us in 2017 as an ACA trainee, after graduating from Durham University where she had studied languages. She is now a manager in our assurance team.


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