NICs avoidance: sham: case law
There is judicial guidance on the meaning of sham, notably the case of Hitch & others v Stone  EWCA Civ 63 (Hitch v Stone), particularly paragraphs 62 to 69. This guidance assists in the consideration of any potential sham argument.
To be a sham, all parties must intend some form of arrangements that are different to the ones as legally presented. At paragraph 63 of Hitch v Stone Lady Justice Arden states
“… It is of the essence of this type of sham transaction that the parties to a transaction intend to create one set of rights and obligations but do acts or enter into documents which they intend should give third parties, in this case the Revenue or the court, the appearance of creating different rights and obligations.”
In other words, if the terms that actually bind the parties are the same as the terms as documented and presented to others, then it is not a sham arrangement.
Lady Justice Arden provides a helpful comment at paragraph 67 of Hitch v Stone, stating
“… the fact that the act or document is uncommercial, or even artificial, does not mean that it is a sham.”
Equuscorp Pty Ltd v Glengallan Investments Pty Ltd  HCA 55 is another notable case that gives guidance on the meaning of sham. The decision was after Hitch v Stone. At paragraph 46 sham is described as
“steps which take the form of a legally effective transaction but which the parties intend should not have the apparent, or any, legal consequences”.