Employee benefit trusts and the EBT settlement opportunity

Employee Benefit Trusts, or EBTs as they are commonly known, have been used extensively by UK employers over many years as a means to reward staff and directors. The tax treatment of contributions to EBTs continues to be the subject of litigation, with HMRC arguing in many cases that PAYE & NIC should be accounted for on many contributions when they are allocated to a sub-fund or sub-trust.

The controversy over the tax status of EBTs and loans made by trustees to beneficiaries led to HMRC has not been resolved by the tax Tribunals and Courts and in 2012, HMRC announced the terms of its Settlement Opportunity.

The terms of settlement offered by HMRC are, broadly, to achieve a corporation tax deduction for EBT contributions employers must now pay over the PAYE & NIC that HMRC believe is due. The situation is complicated by the age of many cases, which means HMRC’s ability to recover tax and NIVC may be restricted. Another major factor to consider is that HMRC’s view has not been endorsed by the Courts.

We specialise in helping employers review their options an opportunities in relation to EBTs generally, the HMRC settlement opportunity and dealing with the impact of HMRC accelerated Payment Notices.

To discuss whether or not the settlement opportunities are suited to you then please contact us to speak to a member of our team.