United Kingdom
20 April 2011 - EBTs - HMRC's "settlement opportunity"
HMRC has announced an Employee Benefit Trusts settlement opportunity.
HMRC considers that some existing EBTs are ineffective, and intends to contest their tax treatment in periods before those to which the new 'disguised remuneration' rules apply. HMRC's purpose in offering a "settlement opportunity" is to attempt to resolve disputed cases in a way that minimises costs both for taxpayers and HMRC itself.
Essentially, the settlement terms are that PAYE and NIC (and interest thereon) are accounted for in full on contributions made to EBTs, in return for a corporation tax deduction for the contributions. These terms may not be attractive in many cases, and clients need to decide whether they are prepared to enter into litigation to defend their arrangements, if necessary.
There is no formal deadline for the "settlement opportunity", but HMRC will write to all employers or companies who have open EBT enquiries before the end of August 2011 to invite discussion about potential settlements. HMRC states that if employers or companies do not respond by 31 December 2011, it will assume that they are not interested in engaging with them and will look to progress enquiries formally.
Clients will therefore need to review existing EBT arrangements and decide whether to contest any HMRC challenge, or whether to settle on HMRC's terms.
Please contact us for assistance in reviewing any cases, or in defending arrangements which are considered to be effective.
Jeff Webber (Telephone: 020 7893 3578; Email: jeff.webber@bdo.co.uk)
Malcolm Pengelly (Telephone: 020 7893 2936; Email: malcolm.pengelly@bdo.co.uk)