“I knew it was a loan.” It is an important admission in the increasingly complicated dispute over historic contractor loan recalls. Not every contractor now facing demands relating to old remuneration arrangements says they had no idea that loans formed part of the structure. Some knew perfectly well.
Their complaint is different. They say the rules changed.
Over recent months, ContractorUK has been examining the paperwork of contractors facing demands relating to arrangements they used more than a decade ago. In our earlier investigations, we asked who now owns the loans, how the alleged debts travelled between companies, and what evidence exists to support that chain of ownership.
But there is now another question: What exactly was the original legal obligation?
To explore it, we went back through the surviving paperwork of three different contractors, united by the admission that they knew loans formed part of the arrangements they used.
We asked a series of different questions: What did “loan” mean? When was it repayable? Who could demand repayment? Could that right be transferred? What were contractors told would eventually happen to the loan? Can the obligation being pursued today actually be traced back to the agreement the contractor accepted? And, where Isle of Man entities appear in that chain, what exactly were those companies doing at the relevant time?
The documents do not provide one simple answer. But in one contractor's archive, the paperwork begins changing within weeks.
Luke knew there were loans
We first introduced “Luke” to ContractorUK readers during our investigation into who owns the historic contractor loans now being pursued. His identity remains protected.
Luke used Garraway after moving from limited-company contracting into what was presented to him as an employed solution.
His surviving paperwork is particularly valuable because it includes not only later demands, but contemporaneous contracts and marketing emails. And those documents immediately complicate the idea that contractors like Luke simply didn't realise loans were involved.
He did.
His original February 2013 employment documentation expressly referred to a loan. It also contained a repayment mechanism.
In other words, this isn't Amanda's story.
As we reported previously, Amanda says she thought the money she received for eight weeks' work was her pay and has spent years asking how part of it subsequently became an alleged loan.
Luke's position is different. He knew. The more interesting question is what he knew he was agreeing to.
Five weeks later: a “new solution”
On March 14, 2013, barely five weeks after Luke's original contract, Garraway emailed him about what it described as a “new solution.”
Garraway told contractors it invested considerably in working with leading UK tax counsel to remain abreast of legislation and ensure its solutions were robust and compliant. The new arrangement was described as an: “up front, fully disclosed tax avoidance scheme” which would allow contractors to continue enjoying the existing benefits.
Luke was told he would continue to receive the same level of tax efficiency and that taxes and National Insurance would be paid through his salary.
Garraway also promised: “Peace of mind that your provider has a solution for the long term.”
But participation required action. Contractors were instructed to accept the changes and complete a new employment contract. From April 6, Garraway said, that new contract had to be completed for contractors to continue being paid.
That doesn't establish anything improper. It does establish something important for our investigation: the contractual arrangements weren't static.
Then DOTAS changed
Two months later came another email. Garraway told Luke that its employed scheme for 2012/13 met a number of the hallmarks under the Disclosure of Tax Avoidance Schemes regime and that the arrangements had been notified to HMRC.
The company told contractors that the scheme had been created by a respected tax QC and reassured them about the tax planning underpinning it. As for the significance of the DOTAS registration to the contractor? It stated: “In truth, not a great deal!”
Luke was instructed to notify HMRC of his use of the scheme. Again, the significance here isn't that DOTAS registration itself tells us whether Luke owed a loan. It is that Luke's surviving emails allow us to watch the arrangement evolve in real time.
And another significant change followed.
“Nothing else will change”
In January 2014, Garraway announced that it was moving from the Isle of Man to the UK. Its email to Luke was emphatic:
“The only change to your contract will be our business address, nothing else will change.”
GarrawayHe was instructed to click an acceptance button, review the new contract, and agree to it electronically. But the email also instructed him to do something else.
He was to sign a paper Contract of Employment and Loan Agreement when they arrived in the post and return both signed documents by January 31. The following day, Luke received confirmation that he had completed the electronic acceptance process for his new Contract of Employment.
And here the paper trail becomes interesting.
In Luke's earlier contract, clause 3.1 expressly dealt with the loan and circumstances in which it would become repayable. In the electronically accepted January 2014 employment contract, clause 3.1 says something completely different: “You are employed to provide the Services to Clients and End Users that we may reasonably require from time to time in light of your skill set.”
The previous loan wording has gone. Had the rules changed?
The previous day's email specifically anticipated a separate paper Loan Agreement. That document could contain the same repayment provisions as before. It could contain different provisions. It could answer the question completely.
We cannot fill that documentary gap simply because one interpretation makes a better story. But it leaves a straightforward question: If “nothing else” was changing, what did the separate 2014 Loan Agreement say?
Another Garraway contractor, another missing agreement
Luke isn't the only Garraway contractor whose archive develops a gap at precisely the point where the original loan terms become important. Another contractor, who we'll call Andy, also used Garraway.
Andy doesn't deny knowing about the loans either. In fact, his account of the process is unusually specific. He says he used a Garraway portal to request individual loans and electronically accept the associated terms. A request would then go to the relevant trust for approval.
His explanation of what he understood himself to be doing is equally important. Andy says he understood the loan as an artificial mechanism used to deliver the tax planning. He says he was assured the arrangement was legal and that the loans would not ultimately be recalled in the way conventional borrowing would be. He also says he was told that another financial mechanism would eventually resolve them.
Most importantly, Andy believes he still has a contemporaneous email explaining what was supposed to happen to the loans. ContractorUK has asked him to find it.
That email could be important, because it would allow us to compare what Andy was being told at the time with both the contractual documentation and the position being asserted today.
More than 100 pages — but where is the agreement?
ContractorUK supplied Andy's extensive surviving archive to our source, who has detailed first-hand knowledge of contractor loan arrangements and subsequent loan transactions.
They read the lot. As our source put it afterwards:
“You can’t send me a 100+ page bundle and not expect me to read through the entirety!”
Our sourceThe bundle contained generic scheme marketing and documents Andy had accumulated over the years, alongside material he obtained in 2020 by making a subject access request (SAR) to Felicitas.
Our source could identify an assignment of Garraway loans from the former trustee to Felicitas, accompanied by an unsigned copy notice of assignment which had not been completed with Andy's individual loan and debtor details.
They were careful about what could — and couldn't — be inferred from that. The incomplete notice was “not ideal”, our source said, but was “,unlikely in itself to vitiate the notice of assignment.”
More important was the document they couldn't find: “I don’t see any copy loan agreements in the bundle.” Andy says he used Garraway's portal to request loans and electronically accept their terms.
Our source offered one possible explanation for the gap. They suggested that debtor files acquired by third parties were often in a disorganised state and that administration teams were often funded to collate and sort the debtor data. Andy's 2020 subject access response itself referred to “unstructured data.”
So the absence of an agreement from a 2020 disclosure doesn't establish that the agreement never existed. But six years have now passed. And Andy is once again receiving demands.
Our source's view of what should happen next was unequivocal: “What remains missing is a copy of the Garraway loan agreement. At the very least [Andy] should request and be provided with a copy of this.”
They suggested a fresh subject access request covering not only Andy's personal data, but loan agreements and ancillary documents, correspondence, and the deeds, letters or other documents evidencing the title trail from the original lender to the current creditor.
Their wider point goes to the heart of this investigation:
Our source
“As with all of these loans, establishing that the relevant documents are in order and that the title trail is complete must be a starting point for anyone seeking to enforce creditor rights.”
And the same exercise works in reverse.
“Conversely, one of the avenues that a person seeking to defend a claim should explore is whether there are any missing documents or procedural gaps.”
And our source drew an important distinction between the position in 2020 and today:
“While it might have been reasonable for the loan documentation not yet to have been located at the time of [Andy’s] 2020 SAR, it should be a reasonable expectation for a new debt owner, six years on, to be able to provide copies of the documents, particularly if it is actively seeking to enforce creditor rights.”
Do the later terms match the original?
Andy has also raised a more specific question about the documentation. He says the repayment provisions in material subsequently supplied to him do not match the terms he understood himself to have accepted through Garraway's portal.
In particular, Andy says the original arrangement involved a much longer repayment period, whereas later documentation appeared to him to allow the principal to become payable on demand.
That is potentially significant — but it is also something we should be able to test.
The difficulty is that the precise Garraway loan agreement Andy says he electronically accepted is not among the documents our source was able to identify in his extensive archive.
Nor would it be safe simply to select another Garraway-era agreement and assume its terms applied to Andy. The material ContractorUK has examined across these arrangements contains different formulations concerning repayment.
So the next step is documentary rather than interpretative. ContractorUK is trying to identify the exact agreement Andy accepted through the Garraway portal. We have also asked Andy to locate the contemporaneous email he says explained what would ultimately happen to the loans.
That would allow a much more precise question to be answered: Are the creditor rights being asserted today the same rights contained in the agreement Andy actually accepted?
What if the agreement came after the money?
Our third contractor presents a different version of the same problem. We'll call him Amir.
Amir says payments under the arrangement had already begun before the relevant documentation was sent to him. The document was presented as a deed of trust.
It expressly contemplated execution by Amir, with a separate space for a witness to attest his signature, and required the executed document to be returned. Amir says he never signed it, had his signature witnessed, or returned it.
Under section 1 of the Law of Property (Miscellaneous Provisions) Act 1989, an instrument intended to operate as a deed must be validly executed as a deed. Where an individual executes a deed by signing it, the statutory requirements include signing in the presence of a witness who attests the signature.
That does not, by itself, establish that no contractual or loan obligation could have arisen by some other route. But it makes the chronology — and the intended status of the document — particularly important.
Money first. Purported deed later. Signature and witnessing expressly contemplated. Amir says neither happened and the document was never returned.
If the terms contained in that document are now relied upon as governing the money Amir had already received, there is therefore a more precise question to answer: Was this document ever executed as the deed it purported to be — and, if not, what is said to make its terms binding on Amir?
The 30-year loan that wasn't quite a 30-year loan
Amir's documents also demonstrate why the precise wording of the original paperwork matters. The provision states that each loan is repayable “on or before the thirtieth anniversary” of it being made. The document cannot safely be reduced to a claim that the lender was obliged to wait until the 30th anniversary.
But correcting that interpretation doesn't answer the preceding question.
Before asking what this document's repayment clause meant, there is a prior question: was the document containing that clause ever executed — or otherwise effective — so that its terms governed Amir's loans in the first place?
So did they change the rules?
A creditor isn't changing the rules merely because it exercises a contractual right which a borrower never expected it to use. What a contractor was told about how an arrangement would operate also needs to be considered separately from the contractual terms they actually accepted. And sales material describing an arrangement one way does not necessarily replace the terms of the underlying agreement.
But the reverse is important too. A demand for repayment today ultimately depends upon an obligation created yesterday.
If that obligation has subsequently passed through trustees, lenders, assignees, purchasers and administrators, it should be possible to work backwards through the paperwork and identify what the original borrower agreed to and how the present creditor acquired the rights it says it possesses.
Luke's documents show new solutions, new contracts, a changed DOTAS position and a move between jurisdictions — accompanied by repeated assurances about compliance and continuity.
Andy says he electronically accepted individual loan terms through Garraway's portal, yet our source could not identify that underlying agreement in the extensive archive they examined.
Amir says the document containing the purported rules arrived after the money had already begun arriving.
They aren't the same case. But they produce the same question: What, exactly, were the rules?
ContractorUK spoke to HMRC, OFT (Isle of Man), and our source to create this article. All contractor names have been changed.
The Rules Test: reconstruct your own loan
Contractors trying to understand historical demand can apply the same test we used to their own files.
This isn't a DIY verdict on whether a debt is enforceable. Contract formation, assignment, tax treatment, financial regulation, trust law and limitation can raise different legal questions.
What the exercise can do is show where the important questions are — and what finding X might actually mean.
Rule 1: What did “loan” mean when you entered the arrangement?
Was the payment presented as conventional borrowing? Part of your remuneration? An advance? A trust distribution? Or a mechanism through which your earnings would be delivered?
Then find the agreement. HMRC's own Employment Income Manual contains a useful starting principle. It says: “The identification of the loan or loans made is a crucial step.”It goes on to say that a loan is created by an agreement between borrower and lender and that the agreement sets out the scope of the loan.
That guidance is about the tax treatment of beneficial loans, not a judicial ruling on the private enforceability of contractor loan demands. But the practical question is useful.
What agreement created this particular loan, between which parties, and what did that agreement say?
If the paperwork simply labels something a loan, that might be important. If the contemporaneous sales material describes the payment differently, that might also be important.
HMRC itself now describes some disguised-remuneration arrangements as paying income through loans which individuals were “not expected to pay back.” That does not mean the underlying private loan contracts were necessarily irrecoverable. But it demonstrates why the distinction between “this was called a loan” and “what were the actual terms of that loan?” matters.
Rule 2: When could it actually be repaid?
Find the repayment clause itself. If it says “on demand”, that may mean the lender did not have to wait for a distant anniversary before requiring repayment, depending on the rest of the agreement and applicable law.
If it says “on or before” 30 years, as Amir's document does, don't translate that into “the lender had to wait 30 years”. If it says “on the 30th anniversary”, that may raise a different question.
And if the agreement mentions a 30-year or 50-year term but contains a separate provision allowing earlier repayment after written demand, death, leaving employment or another specified event, read the clauses together.
HMRC's guidance on fixed-period beneficial loans illustrates the drafting point. For that particular tax exemption, HMRC says a provision allowing the lender to require early repayment in specified circumstances means the loan is not genuinely fixed and invariable for the stated period.
Again, that tax rule does not determine the enforceability of these loans. But the lesson is useful: Don't stop when you find the number of years. Find every clause capable of bringing repayment forward.
Luke's original February 2013 documentation, for example, did contain circumstances capable of making the loan repayable earlier. What event, if any, gave the lender the right to demand it earlier?
Rule 3: Who had the right to demand repayment?
Identify the parties: Who is named as borrower? Who is named as lender? Was a trustee involved? Who actually transferred the money? Then compare those names with the company demanding repayment today.
HMRC expressly acknowledges the situation now facing contractors. Its June 2026 guidance says that, in most cases where a third party is seeking repayment of a disguised-remuneration loan, the original provider has sold the outstanding loan to that third party. It also acknowledges that demands can arrive even where scheme users believed they would never be asked to repay.
Rule 4: How did the right get to the company demanding payment now?
Follow the title trail. Look for the original agreement, any provisions dealing with assignment, subsequent assignments or deeds, notices of assignment and correspondence announcing changes of creditor.
For debts governed by English law, section 136 of the Law of Property Act 1925 provides one statutory mechanism by which an absolute written assignment of a debt, accompanied by express written notice to the debtor, can transfer the legal right to the debt and the remedies associated with it.
That does not mean every contractor-loan transfer stands or falls solely on section 136. Other forms of assignment and other legal questions may arise. But it explains why the assignment itself and notice to the borrower are distinct pieces of the documentary puzzle.
This is also where our source's test becomes particularly useful: “Establishing that the relevant documents are in order and that the title trail is complete must be a starting point for anyone seeking to enforce creditor rights.”
A missing link in your own files might simply mean you were never given — or no longer possess — the document. But now you know what to ask for.
Rule 5: What were you told would ultimately happen to the loan?
Search for words such as repay, recall, write off, waive, rollover, settle, transfer, discharge, mature, trust and anniversary. If you were told the loan would never conventionally be recalled, or that another mechanism would eventually deal with it, preserve that material.
What were you told would happen? And what did the agreement say could happen?
HMRC's current guidance is unusually pertinent here. It acknowledges that some users are now receiving third-party repayment demands even though they believed they would not be asked to repay the loans. HMRC tells affected people to examine whether the agreement clearly said the loan had to be repaid and whether they have evidence suggesting otherwise or were told something different when the loans were made.
HMRC also says disputes between private parties over these loan contracts ultimately fall outside its role and may have to be resolved through the courts.
Rule 6: Can today's creditor produce the agreement you actually accepted?
Compare: Borrower. Lender. Date. Amount. Agreement number. Repayment clause. Governing law. Signature or electronic acceptance. Witnessing requirements.
A document from the same scheme is not necessarily your agreement. A later spreadsheet entry is not necessarily the agreement either.
HMRC's formulation is again useful: the identification of the loan is crucial and it is the agreement between borrower and lender that establishes the scope of that loan.
Andy and Amir illustrate two different versions of the documentary problem.
Andy says he electronically accepted loan terms through Garraway's portal, but our source could not identify that underlying agreement in more than 100 pages of material.
Amir has the opposite problem. A document containing purported loan terms exists — but it was presented as a deed, contemplated signature and witnessing, arrived after payments had begun, and Amir says he never executed or returned it.
Andy's case asks: where is the agreement he actually accepted?
Amir's asks: was the document containing these terms ever executed as the deed it purported to be — and, if not, what is said to make those terms binding?
Rule 7: If the Isle of Man appears, what exactly happened there?
Don't assume that the words “Isle of Man” answer the regulatory question.
Our earlier investigation put this issue directly to the Isle of Man Financial Services Authority. The FSA's response drew an important distinction: simply owning or acquiring loans may not necessarily require an Isle of Man financial-services licence, while different legal and regulatory considerations may arise at different stages of a loan's lifecycle.
The FSA pointed us towards another piece of legislation: the Moneylenders Act 1991, administered by the Isle of Man Office of Fair Trading. The Act provides for registration but also recognises exemptions, which is why finding — or failing to find — a company on a register cannot safely be turned immediately into a conclusion about what it was lawfully entitled to do.
The OFT itself continues to maintain and publish notices relating to registrations under the Act. Our subsequent conversation with the OFT produced a more useful practical test.
Identify the company. Identify the activity. Identify the date. Was the company: making the original loan? acting as trustee? acquiring an existing loan? owning it? administering it? collecting it or seeking repayment? Those are not necessarily the same activity, and the regulatory answer may depend upon precisely what an entity was doing and when.
The OFT told ContractorUK that questions about registration and exemptions need to be considered case by case. It also said that where we provide the identity of a company and the relevant period and activity, it can investigate its position, subject to the limitations of historic records.
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