Aspect share scheme trust struck down

A close company’s “facility” to enable employees to acquire shares in the company is a loan and subject to corporation tax, a tribunal ruled.

In Aspect Capital Ltd v HMRC [2012] UKFTT 430 (TC) employees of the investment management firm Aspect Capital received shares via an employee benefit trust (EBT) that meant they did not have to pay for them immediately.

Aspect then paid the facility amount to the EBT trustee, less the stamp duty due, and the trustee transferred legal title to the shares to the relevant employee.

The facility agreement provided that no debt was created unless and until a contingency event occurred such as the employee leaving the company, law firm Pinsent Masons said in an analysis of the highly technical case.

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Comments

Common sense prevails again    2 thanks

secondhand_22 | | Permalink

Another "clever" scheme bites the dust

Except none of these schemes/specious interpretations of law applied by these "specialist" tax planners are clever at all.  The flyers they post to me can say they have a barrister's opinion all they like - they aren't getting through the door of my practice, let alone anywhere near my clients!

One would hope ....    2 thanks

ThornyIssues | | Permalink

secondhand_22 wrote:

Another "clever" scheme bites the dust

Except none of these schemes/specious interpretations of law applied by these "specialist" tax planners are clever at all.  The flyers they post to me can say they have a barrister's opinion all they like - they aren't getting through the door of my practice, let alone anywhere near my clients!

... that said barrister's PII is hit very hard. Secondly, I would hope that the company's accountant's PII is hit very hard too, assuming they were party to the arrangement.

 

Perhaps we could    2 thanks

justsotax | | Permalink

also be made aware of the accountants promoting/selling these schemes...

 

Given the other article re 'trustworthy' accountants....i just wonder who out of the big 4 offer this type of scheme to their clients....

Advisers    2 thanks

thomas34 | | Permalink

We don't know who the advisers were but Ernst & Young trousered large sums of money for both audit and non-audit services.

I guess the decision is subject to appeal but either way this does not appear to be a scheme per se but about interpretation of the law.

These are the sort of people that look down at those who choose to practice without joining their club.

I for one hope that HMRC achieve many more victories against these rackets.

 

Rackets? A tad too harsh.

ThornyIssues | | Permalink

thomas34 wrote:

We don't know who the advisers were but Ernst & Young trousered large sums of money for both audit and non-audit services.

I guess the decision is subject to appeal but either way this does not appear to be a scheme per se but about interpretation of the law.

These are the sort of people that look down at those who choose to practice without joining their club.

I for one hope that HMRC achieve many more victories against these rackets.

 

To paraphrase one reply from HRMC in the GAAR consultations :- 

"We reject any attempt to tighten the scope of GAAR because it has been a long standing principle to pen laws which give HMRC as much scope to interpret said laws as we see fit"

Now that is wrong and while some schemes are/were very aggressive, they used loopholes in these vague and woolly laws which HMRC generally refuse to close. HMRC thus relying on being able to convice a judge that those who navigated a path through the loopholes, actually went against the spirit of the law. Costs being bourne by the deep pockets of the taxpayer, when they (frequently) lose.

Secondly, while I am quite happy for HMG/HMRC to tighten the laws, they should not be able to tackle one single loophole in isolation. Nor should they be free to apply retrospection.

not a scheme but an interpretation of the    2 thanks

justsotax | | Permalink

law.....I suspect what you will find is that the provider finds an 'interpretation of the law' that provides a tax benefit and then sells it to its clients (in a package, that they must disclose as a scheme).

simple solution?

declan12 | | Permalink

At the moment these packaged schemes have to be reported to hmrc with sanctions for non compliance. If we can agree some guiding principles as to what constitutes unacceptable surely it is reasonable for hmrc to have a deadline for deciding in each case whether it is aggressive or already unlawful or neither.  If it is considered to be unacceptable or illegal then the provider would be told that if they market the scheme retrospective changes will be made if necessary to outlaw it. If it is regarded as acceptable planning the scheme could be given a form of clearance  which would not exclude the possibility of future legal changes but would prohibit legal challenge based on current law and retrospective change. Simple?

Tom 7000's picture

barristers opinion    1 thanks

Tom 7000 | | Permalink

They say, ''our opinion is at the utting edge of law and consequently it is given on the basis that we accept no liability etc etc '' so they arent taking the blame...far too clever for that.

 

Im with 2ndhand 22 above ..at the end of the day when it goes pear shaped the clients will blame you.....regardless of scheme organiser

 

 

Warning-soapbox time!    1 thanks

secondhand_22 | | Permalink

I agree - its the accountant who the client trusts - he'll assume the accountant has checked out any ideas he passes to his clients - and will be disappointed if they are later found to be faulty - especially as I doubt the fees are on the small side.

My aim is to build long term relationships with clients - based on mutual trust and respect.  I'm not going to jeopardise that by selling them a duff scheme.  At the same time, I'm not interested in having clients who want dodgy tax dodges.

I also dislike the tax advisors and scheme sellers who give skilled, professional and ethical tax advisors and tax planning a bad name.  I wish they'd leave tax alone and go back to doing PPI reclaims and whatnot