I’ve seen too many offshore payroll ‘innovations’ pitched as NIC savers. The Upper Tribunal’s recent Bilfinger Salamis UK Limited v HMRC [2026] UKUT 00143 (TCC) decision (7 April 2026) slams the door on them. Bilfinger UK lost its appeal over a £2.9m secondary Class 1 NIC assessment. This isn’t isolated—it’s the latest in HMRC’s winning streak against Guernsey-style labour transfers. If your firm uses offshore entities for UK workers, read on.
The Bilfinger Scheme: North Sea Payroll Dodge
Bilfinger Salamis UK provided scaffolding, painting, and maintenance to Marathon Oil’s North Sea platforms. Facing contract pressures, they shifted ~200 employees to a new Guernsey subsidiary (BIS Guernsey) in 2009. Guernsey had no UK presence, dodging NICs. Structure:
- Bilfinger Guernsey supplied ‘labour’ to Bilfinger UK.
- Bilfinger UK contracted directly with Marathon, deploying the workers.
- Payroll via unrelated Guernsey firm; Bilfinger UK handled HR/site management.
The scheme ran until 2014 regulatory shifts. HMRC hit Bilfinger UK with NICs under para 9, Sch 3, Social Security (Categorisation of Earners) Regulations 1978: non-UK employer ‘makes available’ personal services to UK host, rendered for host’s business—host pays secondary NICs.
Full judgment (PDF): Bilfinger Salamis UT Decision | Gov.uk Page
Tribunal Slaps Down ‘Direction and Control’ Defence
FTT ([2024] UKFTT 736 (TC)) ruled against Bilfinger; UT (Judges Aleksander & Scott) upheld. Key holdings:
- ‘Made available’ = ordinary meaning: placed at disposal for host’s use. No statutory ‘direction/control’ threshold (unlike other paras).
- Workers’ non-remote personal services fulfilled Bilfinger UK’s Marathon obligations—substance over form.
- Avoidance purpose (admitted) invoked Ramsay: holistic view confirms liability.
FTT’s minor ‘some direction’ gloss irrelevant—outcome correct.
Commentary: ICAS: Courts back HMRC | LexisNexis: No minimum direction | Addleshaw Goddard
Pattern of Pain: Aramark, Odfjell, Wood Group
Bilfinger cites siblings—all FTT losses:
- Aramark Ltd v HMRC [2024] UKFTT 832 (TC): £6.8m on offshore catering. Claritax
- Odfjell Technology v HMRC [2025] UKFTT 28 (TC): £16.7m North Sea engineers. Claritax
- Wood Group v HMRC [2025] UKFTT 1607 (TC): £18m Guernsey North Sea staff. ICLR
UT appeals pending; Bilfinger precedent broadens risk.
CFO Checklist: Audit Labour Now
- Map offshore labour to UK sites/contracts.
- Test para 9: UK benefit = NIC risk.
- Quantify 6yr exposure (+interest).
- Repatriate or settle pre-audit.
- Disclose in PE diligence.