HMRC Tax Agent blog - Employee Benefit Trusts

18 August 2017

The blog explains the HMRC approach following the decision of the Supreme Court in July, which stated any payments made through Employee Benefit Trust should be considered a taxable income as opposed to a loan.

The decision clarified that where a sum is established as being employment earnings it cannot avoid tax by diverting or paying them to someone else. The Supreme Court’s decision impacts on a wide range of earnings-related tax avoidance schemes which include Employee Benefit Trust (EBTs), Employer-Funded Retirement Benefit Schemes (EFRB), Contractor Loans schemes and self-employed benefit schemes, known collectively as disguised remuneration (DR) schemes.

The blog makes clear that HMRC will be inviting participants of DR schemes to register an interest in settling their tax liabilities arising from the use of these arrangements. Settling will prevent further immediate action by HMRC, as well as reducing interest charges that would otherwise be payable and to giving access to extended payment terms, where these are needed.

HMRC will be issuing details of how to register and settle in the coming weeks however, you can make contact with them about settling your clients’ affairs by email to ca.admin@hmrc.gsi.gov.uk alternatively if you are already speaking to someone in HMRC about the use of a DR scheme, or have a customer relationship manager make contact with them. Further information and guidance will be published by HMRC in the coming weeks.