17th December 2014
Posted in Articles, Business Tax, Employee Incentive Arrangements, Employment Tax, Featured Articles, Inheritance Tax, Trusts and Estates, Private Client, Tax Risk and Investigations, Trusts and Estates by Forbes Dawson
USERS OF EMPLOYEE BENEFIT TRUSTS SHOULD ACT NOW! (OR PAY THE PRICE AFTER 31 MARCH 2015)
As you may know, HMRC have long contended that the majority of EBT arrangements do not work in the way intended, and that the contributions paid into the EBT by the employer should be taxed as earnings.
As an alternative to litigation, HMRC has since April 2011 offered EBT users the opportunity to settle matters by agreement via the EBT Settlement Opportunity (“EBTSO”).
However, the EBTSO will close on 31 March 2015 and after that date the only options available to EBT users will be to take their case forward to litigation or reach agreement with HMRC outside of the EBTSO.
HMRC has made it clear that such settlements will not be able to take advantage of the favourable terms offered by the EBTSO and are likely to be considerably more expensive.
Additionally, it is likely that shortly after 31 March 2015 HMRC will begin issuing Accelerated Payments Notices (“APNs”) to EBT users who have not by then registered an interest in the EBTSO.
On receipt of an APN, the taxpayer must pay the tax and NIC within 90 days. However, the APN is merely a mechanism for forcing payment and the original appeals must still be concluded via the judicial process or by agreement with HMRC. Those who decide to continue with their appeals will have to fund the costs of hearing (and possibly HMRC’s costs too), and will also suffer substantial financial penalties if the conclusion is in HMRC’s favour.
EBT users therefore have a short time to consider their options. We have significant experience of using the EBTSO as a means to settlement. If you or your clients wish to discuss this with us as part of the decision making process please do not hesitate to contact us (As soon as possible!).
You can use this form to request us to give you a call or if you prefer just leave us a message. Please be sure to leave us a contact number or email address for you and we will get back to you as soon as we can.