Taxation – Revenue clamps down on employee trusts

Taxation - Revenue clamps down on employee trusts

The Inland Revenue has clamped down on a string of employee trust schemes involving a leading tax advisor, sparking fears of a wider curb on the use of trusts.

Accountancy Age has learned that the Inland Revenue compliance division’s special investigations unit is contesting deductions made for the corporation tax relief on up to four employee trust schemes set up by Paul Baxendale-Walker, a solicitor and ex-Arthur Andersen tax specialist.

The Revenue accepts companies can set up bona fide commercial trusts to benefit employees through shares or bonuses, but has become increasingly hostile to trusts set up purely for tax reasons.

One of the schemes under investigation, for a small Midlands company, is believed to involve #400,000. The Revenue is understood to be disputing a deduction of #110,000.

Baxendale-Walker admitted three remuneration cases, including one offshore trust scheme, were being investigated by the Revenue, but denied any knowledge of an investigation into the Midlands company and stressed his firm had only a temporary advisory role at the company.

One Group A tax expert said the action against Baxendale-Walker could signal a tougher stance by the Revenue against the more ‘aggressive’ of the offshore schemes.

Anne Redston, a tax partner at Ernst & Young said: ‘The Revenue is nervous about smaller schemes because the scope for abuse is greater.’

Related Articles

What’s yours is mine –Joint property and Form 17

Personal Tax What’s yours is mine –Joint property and Form 17

1m Helen Thornley, ATT Technical Officer
Supreme Court rules against Pimlico Plumbers in landmark employment case

Legal Supreme Court rules against Pimlico Plumbers in landmark employment case

6m Alia Shoaib, Reporter
Inheritance tax is 'unfit for modern society' and should be abolished, says think tank

Personal Tax Inheritance tax is 'unfit for modern society' and should be abolished, says think tank

8m Alia Shoaib, Reporter
Rent-a-room relief – the survey says…

Personal Tax Rent-a-room relief – the survey says…

9m Helen Thornley, ATT Technical Officer
What should the OTS prioritise in its review of inheritance tax?

Personal Tax What should the OTS prioritise in its review of inheritance tax?

11m Alia Shoaib, Reporter
LITRG urges government to consider tax changes in disability work plan

Administration LITRG urges government to consider tax changes in disability work plan

1y Lucy Skoulding, Reporter
HMRC appeal rejected in Tottenham Hotspur case

Administration HMRC appeal rejected in Tottenham Hotspur case

1y Emma Smith, Managing Editor
HMRC urged to clarify impact of income allowances on Self-Assessments

Personal Tax HMRC urged to clarify impact of income allowances on Self-Assessments

1y Alia Shoaib, Reporter