Receiving benefit from an EBT after employment finished

[mjduf1]

I am a regular onshore PAYE UK domiciled taxpayer. Also my family and I are beneficiaries of a Jersey based EBT set up by my ex-employers. The EBT was set-up in 2003/4 tax year. I left their employment in 2004/5 tax year. Upto that point I had a loan for less than 50% of the value of the trust. It was a back to back loan via a 3rd party bank at market rates of interest.Half of the loan has been repaid to allow a different distribution to be made from the EBT at the discretion of the trustees. So the current loan balance is c.25% of the original trust size.
Since Sept 2005 I have requested that the trustees enter into a contract with my children's school to pay for their education. They are currently doing so.

I had been told by my employers (a foreign bank) that in the opinion of their advisers (one of the big international a/c firms)that distributions such as this, particularly after employment had ended, would only attract possible tax liability on the income the trust had received on the monies distributed.
eg £100 total trust value. Trust income £5.
I/my children receive a distribution value of £20.
Tax liability approx (my marginal rate) X (% of trust distributed) X (trust income earned).
So approx 40% X (£20/£100) X 5% = £0.08
Now I am being told I could be liable for the full 40% on the total distribution i.e.40% X £20 = £8
Which scenario applies? Obviously it makes a huge difference. Has there been an adverse development in legislation over the past 18 months that retrospectively impacted this arrangement?