Elphysic Ltd and others v HMRC

In Elphysic Ltd and others v HMRC [2024] UKFTT 291 (TC) (27 March 2024) the FTT allowed in part appeals by four companies (the Lead Appellants). The one part that was allowed related to a decision by HMRC to cancel the VAT registration numbers of the companies and it was allowed because it was accepted by all concerned that the directors were not knowingly involved in any fraud. The two parts that were dismissed related to whether the companies were entitled to (a) use the flat rate scheme (FRS) for small businesses and (b) claim employment allowance to reduce the amounts of employer NIC due.

The case concerned mini-umbrella companies (MUCs) otherwise known as specialist contracting intermediaries (SCIs). Under the MUC business model (‘the scheme’) a MUC employs workers and operates the payroll claiming employment allowance. The chain of supply is such that a...

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