HMRC has decided not to contest a £171m tax dispute involving Ducas Ltd and associated companies, bringing a high-profile case to an abrupt end just weeks before it was due to be heard by the First Tier Tribunal. The dispute concerned alleged unpaid employer National Insurance contributions linked to thousands of healthcare workers supplied to NHS Trusts through recruitment agencies.
Background of the Duca case
The case involved Ducas Ltd, Enix Services Ltd and FL Capital Holdings Ltd, companies linked through common ownership and management. HMRC had investigated arrangements under which healthcare workers were supplied to NHS Trusts through recruitment agencies, with Ducas acting within the labour supply chain.
Under the arrangements, NHS Trusts paid recruitment agencies a gross amount for each worker supplied. Those payments were calculated to cover net wages, PAYE income tax, employee National Insurance contributions and employer National Insurance contributions. The agencies then paid Ducas for the services provided within the supply chain.
HMRC calculated that the arrangements involved around 30,000 workers and estimated that more than £171m in employer National Insurance contributions had not been paid. The dispute centred on how workers were ultimately paid and where liability for those tax obligations sat within the supply chain.
In November 2024, HMRC secured freezing orders from the High Court against Ducas, Enix Services Ltd and FL Capital Holdings Ltd. The court accepted that HMRC had established a good arguable case and that there was a real risk assets could be dissipated before any final judgment could be enforced.
The companies appealed HMRC's assessment, and the dispute was scheduled for a 20-day hearing at the First Tier Tribunal beginning in April 2026. However, shortly before the hearing was due to begin, HMRC decided not to contest the Appeal.
HMRC Allegations
HMRC alleged that Ducas had structured arrangements that resulted in employer National Insurance contributions not being paid. According to the tax authority, funds received from recruitment agencies were passed to an associated company, Enix Services Ltd, which paid many workers gross through personal service companies.
HMRC argued that, despite contractual arrangements indicating that PAYE and National Insurance contributions would be deducted and paid to the tax authority, payments were instead made gross, without those deductions being applied.
HMRC claimed that these arrangements resulted in a substantial underpayment of employer National Insurance contributions, estimating the liability at £171,296,046.05. The freezing orders were granted to preserve assets while the dispute progressed through the normal tax appeal process.
Ducas Statement
Following HMRC's decision to withdraw from the case, Ducas and the associated companies issued the following statement on 06 Mar 2026:
"On the 29 Nov 2024 HMRC convened a 'without notice' hearing at the High Court and obtained Freezing Orders against two of the companies in the FL Capital Group of companies and the holding company itself. HMRC alleged that £171m of 'Employer
National Insurance' had not been paid.
The companies engaged specialist tax lawyers to assist them: Iain MacWhannell of Joseph Hage Aaronson and Bremen LLP, who instructed Christopher Stone KC and David Bedenham KC, both of Devereaux Chambers. The Legal Team assisted the companies in filing an Appeal against HMRCs assessment in December 2024.
The companies continued to trade under some restrictions which later included compliance with a further High Court direction ordering that an amount of money was retained from gross payments made to some PSCs and put aside in a 'Retentions
Account'.
The owner of the business, Tim Monks and his wife, were also later personally subjected to Freezing Orders.
A twenty day hearing at the First Tier Tax Tribunal was scheduled to start on the 13 Apr 2026 to take place over a five week period. Extensive preparation work has been done by both sides.
On the 03 Mar 2026 HMRC decided that they would not contest the case and have
asked the FTT to allow the company's Appeal in full. All High Court action has also been discontinued and the Freezing Orders discharged.
All monies held in the 'Retentions Account' will be returned to the relevant PSCs within the next two weeks.
We would like to thank our excellent Legal Team, our employees past and present who all worked hard to produce the voluminous quantities of documents needed for our defence and our loyal and supportive agency clients who have stuck with us through a very difficult 15 months.
Maxipay will continue to trade and to meet the challenges of ever changing umbrella company and employment legislation including the new Chapter 11 ITEPA. We welcome the proposed industry regulation under the Fair Work Agency in 2027."
ContractorCalculator comment:
Dave Chaplin, CEO of ContractorCalculator, says: "The Ducas case has resulted in strong reactions within the contractor and umbrella company sector, with many wrongly accusing Ducas of fraud. The stark reality is that the outcome highlights a flaw in the off-payroll legislation that I first raised with HMRC in May 2023.
"The flaw in the off-payroll legislation created an anomaly that enabled what became known as the 'Gross Payment Model' (GPM) to flourish. Under this model, an umbrella company could pay workers gross through a limited company structure, bringing the off-payroll rules into play, but because the umbrella and worker had not been provided with a Status Determination Statement (SDS) by the client, the client remained liable for the tax, not the umbrella. HMRC appears to have had no effective enforcement route available.
The implications of the case could extend beyond the companies involved. At a high court hearing held on 29 Nov 2024, the decision stated that Ducas was involved in supplying thousands of individual healthcare workers to NHS Trusts. In my view, the NHS Trusts are now liable for the missing tax under the off-payroll rules. Is HMRC now going to pursue them for the £171m?
"Notably, if the Ducas case been after April 2026, it would have fallen into the new umbrella rules, and HMRC would now be chasing recruitment agencies for £171m."