What does the Supreme Court's ruling mean for EBT schemes?

The Supreme Court has issued its ruling on the Rangers tax case, agreeing with HM Revenue & Customs (HMRC) that loans made to employees under the football club's Employee Benefit Trust (EBT) loan scheme were in fact remuneration and as such, would be subject to Income Tax and National Insurance Contributions (NICs).
Football players and club executives were provided with loans from an EBT. These substantially topped up players' pay. However, the loans were never repaid.
 
The club argued that the loans were not remuneration. HMRC argued that as the loans were not repayable, they were disguised remuneration and raised substantial assessments for unpaid tax and NICs. 
 
The club appealed. Mid-way through the case it went into liquidation and the case was continued by the liquidators.
 
What is the outcome? 
 
The Supreme Court issued its decision on 6 July 2017 stating that the loan was a payment made in consideration of employment services provided and as such did not remove the liability to tax and NICs.
 
The decision of the Supreme Court is not altogether unexpected and brings to a conclusion this long-running battle over the taxability of remuneration paid through the use of Employee Benefit Trusts. 
 
This decision will no doubt give HMRC further backbone in its continued war on tax avoidance. 
 
What does this mean for you? 
 
If you have historically used an EBT then you might be next on HMRC’s target list. If you are unsure about your situation, please contact us. Buzzacott’s Tax Investigations & Dispute Resolution team can provide independent and impartial advice to companies that may have historically used an EBT or that may need assistance in reaching settlement with HMRC in respect of their use of an EBT scheme. This can include advising on administrative matters such as discovery assessments, Accelerated Payment Notices and Follower Notices, including securing time to pay. 


For more information or advice please contact:

Mark Taylor
Head of Tax Investigations and Dispute Resolution
T | +44 (0)20 7556 1243
E | taylorm@buzzacott.co.uk

Aadil Masood
Assistant Manager - Tax Investigations and Dispute Resolution
T | +44 (0)20 7556 1475
E | masooda@buzzacott.co.uk
 
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