Peak PAYE Limited - HMRC named tax avoidance scheme

Peak PAYE Limited

  • Promotor of Scheme: Peak PAYE Limited (PEAK)
  • Address: 86-90 Paul Street, London, EC2A 4NE
  • Publication Date: 8 June 2022
  • Scheme Reference Number (SRN) and date it was allocated: 20510783, 7 February 2022
  • HMRC’s Scheme Description: “Users enter into an Agreement to Grant an Option, called the Option Grant Agreement with PEAK.  After the payment of National Minimum Wage (NMW), PEAK pays the balance to the user as payment for the grant of an option.  These are paid in one aggregate payment. This secondary element of the payment as shown on the Option Grant note is not subject to deductions of tax and National Insurance Contributions (NICs). The aggregate payments amount to around 80-85% of the expected gross contract earnings.”

Peak PAYE Limited – more details

The HMRC website states the scheme operates as follows:

  1. The users enter into an Employment Contract with PEAK. This stipulates that the employee will work on client assignments and that PEAK will pay the employee at least the NMW.
  2. At the same time the users enter into an Agreement to Grant an Option, called the Option Grant Agreement with PEAK.  The users are required to grant the option only after receiving a ‘further consideration’ of £1,000 from PEAK. If the option is exercised, it would require the users, referred to as the ‘obligor’ to pay an annuity to PEAK. As the grantee, PEAK agrees to make payments to the users as consideration for receipt of the grant. These payments are claimed to be capital payments as a result of this agreement and are not made subject to deductions of tax or NICs.
  3. The terms of the supposed future annuity agreement (‘the Annuity Agreement’) with PEAK are set out in schedule 2 of the Option Grant Agreement, as agreed between the parties. The Annuity Agreement records that the yearly calculation for payments will be determined by the formula set out in the agreement. The Annuity Agreement stipulates that ‘such payments will commence on the first day of January 2035 and will continue to be paid annually on this date for the life of the obligor’.
  4. Scheme users submit timesheets on the PEAK portal and PEAK subsequently invoices the agency or end client for the work done by the scheme user in order to receive payment from the agency or end client.  PEAK retains between 15% and 20% of the amount invoiced to the agency or end user for the services carried out by the users, ‘the gross contract value’. PEAK pays the users the remaining balance via a combination of a NMW salary and an untaxed amount, supposedly made as payment for the grant of an option to the users.
  5. This is referred to as the Grantee’s Payments, in the agreements and is evidenced in the Option Grant notifications issued by PEAK to the users. The users’ bank statements show an aggregate total payment in accordance with the net salary per the payroll and the second payment noted on the Option Grant Note as from PEAK on the same day. However, this secondary element of the payment as shown on the Option Grant note is made without being subject to deductions of tax and NICs.

For more information, visit the following page on the government’s website: Current list of named tax avoidance schemes, promoters, enablers and suppliers.

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