Many contractors used various types of arrangements, often via umbrella companies, which offered to provide a higher than ‘normal’ amount of net income.
Usually these arrangements paid a small amount of normal pay, subject to PAYE and NICs. Then the balance of the invoiced amount would be paid (after fees) as either a loan, or sometimes as ‘ex-gratia’ payments, or sometimes as distributions from a partnership.
Unfortunately, HMRC don’t believe that most of these arrangements work and has been challenging them for a number of years. In brief, HMRC believe that if it looks and smells like pay, it should be taxed as pay.Speak to a trusted advisor