Stop notice 11

Arrangement details

The users enter into an employment contract (‘the Employment Contract’) with PeakPAYELtd. The Employment Contract stipulates that the employee will work on client assignments and in so doing will become an employee of PeakPAYELtd. In relation to payment, it states that PeakPAYELtd will pay the employee at least the National Minimum Wage (NMW), or National Living Wage where appropriate.; At the same time, the users enter into an Agreement to Grant an Option (‘the Option Grant Agreement’) with PeakPAYELtd. This is the preliminary agreement under which the users (called ‘the Grantor’ in the agreement) undertake to grant an option which, if exercised, requires the Grantor to enter into an annuity agreement in which the ‘Grantee’, PeakPAYELtd, is the annuitant and the Grantor is the obligor. The users are not permitted to assign any rights or obligations under the agreement without PeakPAYELtd’s consent. On the other hand, PeakPAYELtd has full discretion to assign all or part of its rights under the Agreement without the consent of the users. The users would become required to grant the option only after receiving a ‘further consideration’ of £1000 from PeakPAYELtd. As the Grantee, PeakPAYELtd agrees to make payments to the user 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 National Insurance contributions (NICs).; The users also agree to enter into an annuity agreement (‘the Annuity Agreement’) with PeakPAYELtd. The wording of the Annuity Agreement is attached to the Option Grant Agreement at Schedule 2. The Annuity Agreement records the terms of the deferred private annuity contract, which is the subject 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 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’. The requirement to enter into the Annuity Agreement is triggered by PeakPAYELtd exercising the option under the terms of the Option Grant Agreement. In summary, PeakPAYELtd makes payments to the user and then at a later date can pay £1,000 to exercise the option, triggering a requirement for the user to make payments to PeakPAYELtd under an annuity which are based on the sum of the payments made by PeakPAYELtd to the user.; Once the users are employees of PeakPAYELtd, they are then required to forward timesheets to PeakPAYELtd using a portal for this purpose. The next stage in the operation of arrangements is that the users obtain a timesheet from the agency or end user and forward this to PeakPAYELtd. PeakPAYELtd then invoices the recruitment agency or end user for the services carried out by the users based on the hours worked and the appropriate hourly rate. Once PeakPAYELtd receives the funds for the services carried out, they then process the next step of the arrangements.; The amount that each of the users is entitled to be paid is confirmed in the Employment Contract as being in line with theNMW. This is paid by PeakPAYELtd in line with theNMWhourly rate. This is confirmed by the payslips and the bank statements of the recipients.; PeakPAYELtd withholds and retains a percentage amount, being between 15% and 20% of the amount invoiced to the recruitment agency or end user for the services carried out by the users (‘the gross contract value’) and pays the balance, after the payment ofNMW, as payment for the grant of an option to the user (see 7 below). This balance is confirmed in the Option Grant note.; PeakPAYELtd makes the secondary payment called the ‘Grantee’s Payments’, as referred to in the Option Grant Agreement and in the Annuity Agreement. These are evidenced in the Option Grantee notifications issued by PeakPAYELtd to the users as well as the users’ bank statements, which show an aggregate total in accordance with the net salary per the payroll and the second payment, noted on the Option Grant Note as from PeakPAYELtd, the same day. These are paid in one aggregate payment. This secondary element of the payment is made without deductions of tax andNICs. The Grantee’s Payments that PeakPAYELtd makes to the users are claimed not to be subject to Income Tax orNICs.