Employee benefit trusts (EBTs) were the focus of attention at the recent Chartered Institute of Taxation (CIOT) webinar where Phil Gilbert, EBT lead at HMRC, together with Andrew Hubbard, director of tax policy at RSM Tenon and past CIOT president, and Colin Ben-Nathan, tax partner, KPMG and CIOT chair of employment taxes committee, were speakers. Mark Cawthron, CCH tax specialist, followed proceedings
A theme throughout the webinair was ‘engagement’. In the context of the ongoing ‘EBT settlement opportunity’, Gilbert said HMRC would like to see advisers helping HMRC to settle cases if their clients wished to do so.
He emphasised that ‘no names’ contact was available; that if advisers had a view on liability or how to approach settlement, they should discuss it with HMRC; and that there is flexibility in the September 2012 FAQs.
Those FAQs recognise the full range of taxes is involved. Hubbard said there was much to welcome in HMRC’s approach and the greater willingness to engage.
This is all very good given the sheer volume of cases, which renders the current situation ‘unmanageable’. And there are taxpayers out there who, for commercial reasons, will be interested in achieving a resolution sooner rather than later, if possible.
But it was also clear from the discussion that against this general background of engagement and mutual desire to move on and clear the backlog, there remains an inevitable tension between the two sides.
Gilbert emphasised that while EBTs clearly cover a wide range, on those EBTs that HMRC is concerned with, the view is that most cases ‘give rise to a payment of earnings’; the disguised remuneration legislation from April 2011 simply ‘puts this beyond doubt’.
From the taxpayer’s side, Ben-Nathan emphasised the starting point for advisers must always be the technical position on the particular facts of the case. He said HMRC’s perspective had ‘evolved’in the last two or three years.
There will then be other matters to look at, including how those facts fit in to the framework of the EBT settlement opportunity, for example where PAYE/NICs to be collected are ‘out of time’.
Illustrating the different directions of the two sides, it was interesting to see the HMRC side listing several cases – PA Holdings, Sloane Robinson, Forde & McHugh, B W Male & Sons, Murray Group. No mention of Dextra and Sempra – which, of course, the taxpayers’ side were keen to point out.
As for the Murray case (Rangers Football Club EBT case), Gilbert said HMRC was ‘disappointed with the end result’ and is waiting to hear if its application to appeal will be accepted. Developments in this case will be keenly awaited by all.
Mark Cawthron, tax writer, CCH
