In Macleod and Mitchell Contractors Limited and William Mitchell v HMRC [2017] TC 05633 the First Tier Tribunal (FTT) found that insurance premiums paid by a company where the contracts were in a director’s name were taxable as earnings. This decision was reversed by the Upper Tribunal in 2019.

  • The taxpayer was the sole director and shareholder of the company.
  • Several insurance policies relating to the director were taken out.
  • The director claimed that it was the intention that these would be in the company name, but due to an error by their adviser the contracts were actually in his name.
  • The company paid the premiums on the policies.
  • The error was only discovered following a HMRC PAYE audit, and shortly afterwards the policies were all assigned to the company.

The FTT dismissed the appeal, finding that the premiums paid by the company were subject to tax and NICs:

  • Intention was not relevant: instead you must look at the actual transactions.
  • When the situation came to light the company did not seek to recover the premiums it had paid from either the director or the insurance company, and had therefore taken a decision to settle a liability on behalf of the director.
  • Although there might be merit in the argument that the director held the policies on constructive trust for the company, that was not the case here: there was no tangible asset which could have been held in such a trust, and none of the parties were aware of a trust existing.


Our subscriber guides:

Insurance: deductions and receipts


Directors: tax planning toolkit for 2016/17

Case reference: William Mitchell & Mitchell and Mitchell Contractors Limited v HMRC [2017] TC 05633

Upper tribunal decision Macleod and Mitchell Contractors Limited and William Mitchell v HMRC [2019] UKUT46