EMPLOYERS RUNNING Employee-Financed Retirement Benefit Schemes are to receive letters from HM Revenue & Customs offering them the opportunity to settle any outstanding liabilities.
EFRBS are based on Employee Benefits Trusts, which uses trusts – often offshore – to pay staff in the form of tax-free loans. Instead of being used for remuneration purposes, it goes towards employees’ pensions.
Customers have until 31 December 2013 to consider the proposals made in the letter and to indicate whether they wish to take advantage of the options offered.
If they do, any settlement between them and HMRC will be concluded by 30 June 2014.
HMRC is giving employers two possible routes for settlement:
Option 1: No deduction is due from CT profits for contributions made to the EFRBS until relevant benefits are paid out by the EFRBS, or;
Option 2: PAYE and National Insurance Contributions (NIC) are payable on the contributions made to the EFRBS. A deduction can be made from CT profits for contributions made to the EFRBS.
MHA MacIntyre Hudson tax director Alastair Kendrick said: “It is clear that employers who have difficulties in this regard will need to take initially a step back and decide which option is the most sound basis of settlement given their tax position.”
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