Tax avoidance is a card game - the metaphors multiply

I've long been of the view that if someone is intent upon undertaking any form of structured tax avoidance they need to play straight. And that means placing all of their cards face up on the table.

In a recent tax case Malcolm Gammie QC also used a card playing analogy:

The tax scheme, he said, was a game and he then described a game of bridge:

"... assume that North, East, South and West enter a room and sit at a table. North (the employer) holds cash that he has already said he will share (as an annual bonus) with West (his employee). The common understanding and intention of all concerned is that North will hand the cash to East, East will hand the cash to South and South will hand the cash to West. If the question is asked, has North paid West his annual cash bonus, the answer is quite clearly yes. ...

The answer does not change just because North produces a pack of cards so that the cash can pass from North to East to South to West under the cover of a card game."

The case involved PA Consulting, their EBT schemes (from 1995 and 1999) and bonus payments for 2000/01, 2001/02 and 2002/03. (TC00063: PA Holdings Ltd and Kully Janjuah).

For the record the tribunal determined that the disputed payments were both distributions and earnings. However the tribunal had to also accept that because the sums were taxable as distributions they could not also be taxed as remuneration. So as regards this element of the appeal they found in favour of the taxpayer. However, in respect of the NIC contributions, the tribunal found for HMRC and commented that there was no bar in law which prevented the tribunal reaching the conclusion that the payments received were in fact earnings.