- Promotor of Scheme: Saxonside Limited (SAX)
- Address: Centaur House, Ancells Road, Fleet, GU51 2UJ
- Publication Date: 29 June 2022
- Scheme Reference Number (SRN) and date it was allocated: 92439361, 6 April 2022
- HMRC’s Scheme Description: “Users enter into an agreement to Grant an Option, called the Option Grant Agreement. After the payment of National Minimum Wage (NMW), SAX 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 tax and National Insurance Contributions (NICs). The aggregate payments amount to around 80-85% of the expected gross contract earnings.”
Saxonside Limited – more details
The HMRC website states the scheme operates as follows:
- The users enter into an employment contract with SAX. This stipulates that the employee will work on client assignments and SAX will pay the employee at least the NMW.
- At the same time the users enter into an agreement to Grant an Option, called the Option Grant Agreement with SAX. The users are required to grant the option only after receiving a ‘further consideration’ of £1000 from SAX. If the option is exercised, it would require the users, referred to as the ‘obligor’ to pay an annuity to SAX. As the grantee, SAX 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.
- The terms of the supposed future annuity agreement (‘the Annuity Agreement’) with SAX 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’.
- Scheme users submit timesheets and SAX subsequently invoices the agency or end client for the work done by the scheme users in order to receive payment from the agency or end client. SAX 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’. SAX 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.
- This is referred to as the Grantee’s Payments in the agreements and is evidenced in the Option Grant notifications issued by SAX 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 SAX 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.