EBT and HMRC discovery provisions


EBT and HMRC discovery provisions

Postby rufusTfirefly on Wed Feb 06, 2013 9:29 pm

I have received a Tax re-assessment from HMRC for the year 2008/2009 made under the provisions of Section 29 Taxes Management Act 1970.
During that particular year I was on an EBT scheme whuch I believe was a legitimate arrangement.
I was wondering how I stand regarding this demand from HMRC.
Thanks in advance for any help/advice.
rufusTfirefly
 
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Re: EBT and HMRC discovery provisions

Postby mullet on Wed Feb 06, 2013 10:33 pm

If you don't believe that it is due, appeal. Given the date (the normal time limit for 2008-09 expires on 05-04-2013) HMRC have probably issued this assessment to protect their position and will be expecting an appeal. But HMRC usually deal with these situations via Reg 80 charges on employers, so they are probably assessing you too just to be on the safe side.

Whilst you may be confident that the scheme was a legitimate arrangement, HMRC are unlikely to share your view. Indeed, looking at their latest stance they seem pretty confident ... http://www.hmrc.gov.uk/news/ebt-news0812.htm

HMRC has been successful in litigating cases which have involved EBTs as part of the arrangement(s) entered into by a company/employer. The most significant of these cases is HMRC Commissioners v PA Holdings Ltd [2011] EWCA Civ. 1414 where the Court of Appeal decision upheld HMRC's arguments that an arrangement intended to deliver a bonus through an EBT was subject to tax and NICs as earnings.

HMRC considers that the Court of Appeal judgment supports its view that arrangements to avoid PAYE and NICs through the use of EBT structures do not work. HMRC's view in relation to EBTs is published in Spotlight 5 (see the link below). For many EBTs, the allocation is the point at which the funds go into a sub-trust for the individual employee or their family but ultimately when the charging point for PAYE and NIC arises will depend on the facts of the individual case.
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Re: EBT and HMRC discovery provisions

Postby rufusTfirefly on Thu Feb 07, 2013 11:22 am

Hi Mullet

Thanks for the reply.

I was assured by the Company that the EBT scheme was 100% legitimate, but I gues having read the above they treat each sheme on its merits and mine may not pass their tests.
I am awaiting advice from my accountant.
If I pay it, I guess they could send me one of these letters for the next couple of years. My EBT ended 31/03/2011 and I reverted to a limited company.
rufusTfirefly
 
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Re: EBT and HMRC discovery provisions

Postby sandman on Thu Feb 07, 2013 1:04 pm

Hi Rufus,

Do you mind letting us know who the scheme provider was?
Have you not approached them?....would be interesting to see what they have to say.

The case law is at the moment agaisnt HMRC on EBTs...i.e. loans cannot be taxed for PAYE and NIC (although HMRC are still challenging this in the courts). So suprised that they are issuing tax demands (if that is what you have got), as their strategy seems to be go down the settlement route with companies who were operting EBTs.

I would defnitely take advice from the scheme provider or other accountant/tax firm before proceeding.
sandman
 
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Re: EBT and HMRC discovery provisions

Postby rufusTfirefly on Thu Feb 07, 2013 10:26 pm

Hi Sandman

Thanks for the reply
The scheme operator has closed down so proving difficult to get any contact.No surprise there.
HMRC said in the letter that the tax re-assessment was because I was operating within an offshore E.B.T.
scheme but as the work was carried out in the UK so all the income is taxable. In view of this, I'm surprised to read your post above saying that EBT loans aren't subject to Ta
x and NICs .

I'm awaiting advice from my accountant.
The scheme provider was Arnica Solutions.
rufusTfirefly
 
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Re: EBT and HMRC discovery provisions

Postby sandman on Fri Feb 08, 2013 11:28 am

Hi Rufus

If you got a loan from an ebt then there are 3 court rulings that loans are not income and therefore no tax is due on them. Most recently the rangers appeal returned the same verdict last Nov...although hmrc are appealing it. The other two cases are sempra and dextra. But you wont see references to these on hmrc website........google them.

This should be the basis of your appeal but I am not a lawyer so please get specialist advise. And if your accountant is not familiar with ebt I would advise he also seeks specialist advice.
sandman
 
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Re: EBT and HMRC discovery provisions

Postby rufusTfirefly on Fri Feb 08, 2013 8:17 pm

The schemes invovled were Horizon.Tec and Arnica Solutions and unfortuntely the documentation went missing during a house move. In view of this , and that fact that Mark Duncan (one of the schemes' founders) et al cant be traced,my accountant thinks I have little grounds for appeal unless I can come up with documentary evidence of the scheme, details of the loan arrangements etc.
Looking grim for me at the moment. May have to bite the bullet on this one unless things change.
Obviously I regret getting inolved in the first place. But assurances were given about the legitimacy of the schemes. My fault I guess for not doing due dilligence.
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Re: EBT and HMRC discovery provisions

Postby rufusTfirefly on Sat Feb 09, 2013 6:47 pm

Horizon support is still around ... call 0870 778 0063 as they are dealing with these claims through their lawyer
rufusTfirefly
 
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Re: EBT and HMRC discovery provisions

Postby frontrow on Wed Feb 13, 2013 10:46 pm

I have also received a similar letter today for the tax year 2008/9. I was employed by a company called Edge Consulting Ltd who are still around. I'll be contacting them in the morning to find out what their position is. I suspect from reading this thread that HMRC are taking a blanket approach to dealing with this and as pointed out earlier it's simply them defending their position. I'll keep you updated on whatever advice I receive.

Out of interest if I needed to get independent tax advise what sort of fee's could i expect to pay?
frontrow
 
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EBT and HMRC letter

Postby kzcomp1 on Fri Mar 01, 2013 3:05 pm

Hi Frontrow. I also worked for Edge consulting during 2008/2009 and have received an outrageous demand frm HMRC for tax they say is due.
Have you heard back from Edge yet ?
I had a letter from them saying a company called Advantage Accounts were dealing with these matters.
I have written to both Advantage and Edge but wondered if anyone had any success appealing these demands.
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