The appellants, Vermilion Holdings (Scotland) Limited, were disputing a tax bill for PAYE in the sum of £285,148.76 and £100,709.98 in National Insurance contributions, totalling £385,850.

The liability for the tax rested with an individual taxpayer, software engineer Marcus Noble, who was a co-founder and director of Vermilion Software and had received a share option in the company following a rescue funding package.

HMRC argued that the option was an employment-related securities option, subject to income tax.