THE EBT SETTLEMENT OPPORTUNITY offered to users of Employment Benefit Schemes by HM Revenue & Customs will not be reopened, despite the wide-ranging impact of the Court of Session’s decision last week to throw out Rangers FC’s use of the arrangement.
Under the ruling, the court held the corporate entity that formerly housed Rangers, now in liquidation (oldco), had run a contrived EBT structure between 2001 and 2010 to pay £47.7m to players and staff in tax-free loans.
HMRC had run an EBT settlement scheme which closed on 31 July this year. Under the regime, businesses that used EBTs had to register their intention to settle with HMRC by 31 March 2015, in order to benefit from more favourable terms, and pay up by the end of July. There were no penalties, but now the opportunity has lapsed EBT users could face fines of 50% or more of the tax due.
It is believed that many advisers told their clients to wait and see how the Rangers case turned out, rather than take advantage of the settlement opportunity. Today, those clients are now facing substantial bills, many times larger than those they would have paid had they used the settlement regime.
Given the magnitude of the ruling and its knock-on impact for many clients across the country, there were hopes among some advisers that the settlement opportunity would be reinstated, but HMRC has now confirmed that will not happen.
In statement to Accountancy Age, an HMRC spokesman said: “We have no plans to reopen the EBT settlement opportunity. We would strongly encourage those who have used an EBT in the past to come forward, settle their affairs and put the past behind them.
“It remains open to people to come forward, though the terms of the EBT SO are now closed. If they don’t settle now, we will litigate. HMRC wins around 80% of cases in the courts.”
Since the launch of the EBT Settlement Opportunity in April 2011, more than 700 employer-level users, with significantly greater numbers of beneficiary employees beneath them, took advantage of its terms and settled with HMRC. But it was never intended to be open-ended – HMRC’s other settlement opportunities have defined operational periods.
The decision to withdraw the EBT settlement regime will allow HMRC to redirect resources into progressing the appeals of employers who didn’t take advantage of the settlement opportunity by the cut-off date, the department said.
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