This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. To find out more about cookies on this website and how to delete cookies, see our Cookie Policy.
Analytics

Tools which collect anonymous data to enable us to see how visitors use our site and how it performs. We use this to improve our products, services and user experience.

Essential

Tools that enable essential services and functionality, including identity verification, service continuity and site security.

Where Taxpayers and Advisers Meet

EBT Schemes / APN Notices

admin@j-a-s.org.uk
Posts: 1
Joined: Fri May 01, 2015 11:16 am

EBT Schemes / APN Notices

Postby admin@j-a-s.org.uk » Fri May 01, 2015 11:38 am

Hi,

I have a new client, who joined some EBT (Employee Benefit Trust) schemes several years ago, the client is concerned that he will receive an APN notice from HMRC shortly, following a crack down on these schemes during the last year.

The loans were treated as benefit in kinds - interest free loans/low interest loans and were reported on the relevant P11'd's, taking into account cash equivalents.

However, the lump sum of loans paid to client remain with him and not to going to be paid back. What tax implications are there of this, and what needs to be done as I would imagine the tax computations for the relevant tax years will need to be reworked and the liabilities paid to HMRC plus penalties and interest.

Looking forward to any advice.

Many thanks

Ruby

bd6759
Posts: 3095
Joined: Sat Feb 01, 2014 3:26 pm

Re: EBT Schemes / APN Notices

Postby bd6759 » Fri May 01, 2015 12:37 pm


davidheaton
Posts: 7
Joined: Tue May 27, 2014 8:54 pm

Re: EBT Schemes / APN Notices

Postby davidheaton » Fri May 01, 2015 1:18 pm

This isn't really a question that can be answered generically via an internet forum, as everything will depend on the facts! A few general points can be made, though.

HMRC has yet to prove its point on PAYE and NICs being due on EBT arrangements, as it lost its challenge to the Rangers FC EBT & loan schemes at both FTT and UT in Murray Group Holdings. Murray has now gone into liquidation, so HMRC's appeal to the Court of Session will probably need to wait for another case.

However, if the scheme in question had a DOTAS number, HMRC is likely to issue APNs, with money payable on account whether or not HMRC is ultimately found to be right. It has been delaying the issue of APNs on EBT schemes because, although the tax legislation was passed in 2014, the parallel NIC legislation only took effect on 12 April, and it wanted to collect both alleged PAYE and NIC arrears together. It has, however, issued some APNs to recover any claimed CT relief for contributions, a point that it has established by arguing that, tax relief being one of the main purposes of entering into the scheme, the expenditure had a duality of purpose that was sufficient to disqualify any CT relief. The contributions were argued not to have been made wholly and exclusively for the purposes of the trade, and both FTT and UT have agreed so far (Google "Scotts Atlantic Management").

There is a debate about what you do in your accounts if you have used a scheme and are expecting, but haven't yet received, an APN, but that is also well beyond the scope of a forum post.

If the client wants to concede rather than fight HMRC's arguments, he has missed the deadline for the EBT settlement opportunity, which required registration by 31 March, but HMRC won't turn down the offer of the appropriate amount of money. There is no longer a standardised deal on the table, but they are always open to offers in settlement (and it remains to be seen, but the amount they seek probably hasn't changed since 31 March). Some businesses have settled because they want to wipe the slate clean and move on, some need a clean slate before they can sell their business, and some are hanging on in the hope that somebody else will win the argument, but the APN regime has changed the economics of hanging on.


Return to “Tax Investigations and Enquiries”