As we have previously reported, the Upper Tier Tribunal (“UTT”) decided against HMRC in the most recent round of their litigation concerning the tax treatment of contributions to Employee Benefit Trusts (“EBTs”).
HMRC has now confirmed that an appeal will be made against the decision. The UTT ruled that neither appointments to sub-trusts of an EBT nor that the making of loans out of the assets of the sub-trusts constitute a payment of earnings.
It comes as no surprise that HMRC has decided to appeal: the UTT decision strikes at the heart of HMRC’s approach to EBT contributions, which underlies Spotlight 5 and their settlement offer; in addition, HMRC’s action against the Murray Group effectively forced Rangers into insolvency and demotion to the Scottish Football League Third Division. It will be a significant and high profile blow to HMRC if the UTT decision is not reversed.
If you require any further information in relation to this case or general advice on employee benefit trusts please ring the TaxDesk on 0845 4900 509 and ask for Thomas Dalby.