Deal offered for EBT enquiries

Just before Easter, HMRC made a public offer to companies to settle outstanding claims for tax and NICs on disguised remuneration provided through Employment Benefit Trusts (EBTs).

A new  Schedule in the Finance (No. 3) Bill 2011 will treat loans, money or other assets held in trust but linked to an individual’s as PAYE income. HMRC also plans to bring forward a similar treatment for NICs. The regime came into effect on 6 April 2011, but will apply in some cases dating back to 9 December 2010.

HMRC will write to all employers or companies with current EBT enquiries inviting them to discuss settlements. The department says there is no deadline for the incentive, but if employers or companies do not respond by 31 December 2011, it will assume they are not interested in any deals and will proceed with formal enquiries.

With uncertainty hanging in the air about which arrangements will be caught and which won’t, some critics are advising companies to treat HMRC’s latest offer with caution.

In IFA Online, Society of Trust and Estate Practitioners chief executive David Harvey warned that the legislation still does not provide clarity for employers who operate EBTs, and even though the amnesty offer remains on the table until the end of 2011, companies will not have enough time to work out if their offshore arrangement will be liable.

Solicitor Peter Vaines commented: “Whilst one understands that HMRC regard EBTs with great hostility, and they have no wish to afford any generosity to those involved, this statement does not seem to offer much by way of incentive to unravel the arrangements.”

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