Good news for Tax Avoidance Schemes?

27 November 2012

The recent HMRC Tax Tribunal involving Glasgow Rangers football club and their use of Employee Benefit Trusts (EBT's) failed to deliver a unanimous verdict and actually resulted in the majority of votes being in favour of Rangers.

It was originally thought that Rangers could have been liable for up to £75million in taxes and penalties (although this was liable by the "Old Company" and would not have been paid in full as it is now in liquidation).

An EBT is a discretionary trust set-up for the benefit of the employees.

How HMRC define an EBT:

"General-purpose EBTs may be set up for clear business reasons, such as setting money aside to pay redundancy and other benefits to employees if their employment is terminated. However, EBTs have increasingly been used for avoidance purposes, with the aim of providing employees and directors with benefits in ways that aim to defer, minimise or avoid income tax liability..... and National Insurance Contributions."   

In recent months similar schemes have received adverse publicity including offshore umbrella companies. These will no doubt be feeling more confident that their tax avoidance schemes won't be classed as tax evasion.