Chartered Accountants, Chartered Tax Advisers & Statutory Auditors

Rangers EBT kicked into touch

Source: HM Revenue & Customs | | 12/07/2017

The Supreme Court has ruled in favour of HMRC over a long running tax avoidance case against a former incarnation of Rangers football club (now in liquidation). The case concerned a tax avoidance scheme under which the club paid remuneration to their employees through a complex employee benefit trusts and sub-trusts structure in the hope that the scheme would avoid liability to Income Tax and Class 1 National Insurance contributions. This involved the payments of over £47m to players, managers and directors of the football club between 2001 and 2010.

HMRC has always argued that these payments were part of the employees’ earnings and were therefore liable to Class 1 National Insurance contributions and Income Tax. The long running case was first heard by the First-tier Tribunal (FTT) back in 2012. The FTT found in favour of Rangers football club and this decision was supported by the Upper Tribunal. However, HMRC’s appeal to the Scottish Court of Session was allowed and this decision has now been upheld in a unanimous verdict by all five Supreme Court judges.

The Supreme Court Judge summarised his decision with three interesting points which showed the Court taking a decisive view against tax avoidance.

  1. The tax code is not a seamless garment.
  2. It is necessary to pay close attention to the statutory wording and not be distracted by judicial glosses which have enabled the courts properly to apply the statutory words in other factual contexts.
  3. The courts must now adopt a purposive approach to the interpretation of the taxing provisions and identify and analyse the relevant facts accordingly.

Planning notes: HMRC’s EBT Settlement Opportunity (EBTSO) was launched in 2011 and provided the framework under which HMRC was prepared to settle open enquiries into Employee Benefit trusts (EBT) and similar arrangements without the need for litigation. The EBTSO ended on 31 July 2015. This decision should finally bring an end to litigation relating to EBTs and is likely to have far reaching implications for employers that have still not resolved their positions with HMRC.



Newsletter

With our newsletter, you automatically receive our latest news by e-mail and get access to the archive including advanced search options!

» Sign up for the Newsletter

» Login

 

 

 

 

 

Company Reg No 6537419 and Registered in England and Wales

Contact us.

  • Meet us.
    49 Station Road
    Ainsdale
    Southport
    Merseyside
    PR8 3HH

    01704 575 655
  • Email us.
    This email address is being protected from spambots. You need JavaScript enabled to view it.
  • Follow us on.

Latest News

Pension money purchase allowance reduction 2017-18
20/09/2017 - More...
One of the measures announced in the March 2017 Budget was the reduction in the annual Money Purchase Allowance (MPAA)

Tax relief for electric vehicle charging points
20/09/2017 - More...
In last year’s Autumn Statement, the Chancellor announced a new capital allowance for electric vehicle charging points.

When is a car a van for VAT reclaim purposes?
20/09/2017 - More...
In most cases a business is unable to reclaim the VAT charged when they purchase a car. However, there are different