Another messy remuneration trust scheme

https://www.bailii.org/ew/cases/EWHC/Ch/2021/2581.html

Didn't find your answer?

Similar to this other recent disaster: https://www.accountingweb.co.uk/any-answers/another-messy-pb-w-remunerat...

Clearly Aston Court Chambers used essentially the same RT planning as PB-W, with the same disastrous results.

 https://www.bailii.org/ew/cases/EWHC/Ch/2021/2581.html

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By GR
30th Sep 2021 20:09

Thanks for all your updates.

Out of interest, what are you?

Tax barrister?
Accountant in practice?
HMRC Tax Investigation Defence/Tax consultant?

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Replying to GR:
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By Justin Bryant
01st Oct 2021 10:30

I'm a rather sad Aweb addict I think is the best way to describe me!

I'm glad you agree the case is interesting. It's never a good look to plead your own sham as your defence/claim per para 49 and there was only going to be one result here. The judge's para 142 comment is mildly amusing/sarcastic.

Para 139 shows just how bad things are for the taxpayer in this case.

Interestingly the company changed from Ltd to Unltd after its incorporation around the time of the EBT, presumably to keep its assets etc. confidential.

https://find-and-update.company-information.service.gov.uk/company/06105...

There used to be a bloke on here called carlh who regularly claimed these RTs were the best thing since sliced bread. Unsurprisingly we have not heard from him for quite a while now. See:

https://www.accountingweb.co.uk/any-answers/has-anyone-heard-of-paul-bax...

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Replying to Justin Bryant:
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By Justin Bryant
13th Jun 2023 12:38

Similar PB-W RT planning was found also to be a sham here (I'm a bit surprised HMRC's counsel did not also cite the above case in support of their sham argument):
https://www.bailii.org/uk/cases/UKFTT/TC/2023/TC08778.html

However, in the Dukeries case, the initial, main RT was found to be valid and not a sham (the taxpayer's counsel appears not to have plead that for the initial, main RT). See: https://edge-tax.com/tax-investigation/dukeries-decision-is-not-the-end/

So it's a bit inconsistent (except to the extent the taxpayer was worse of in both cases).

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Replying to Justin Bryant:
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By Justin Bryant
13th Jun 2023 13:47

Anyone who's not settled where a company settlor is involved can presumably run this same sham argument back at HMRC: https://www.gov.uk/guidance/settlement-opportunity-for-users-of-remunera...

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By Justin Bryant
23rd May 2023 10:52

The taxpayer unsurprisingly lost their appeal.

https://caselaw.nationalarchives.gov.uk/ewca/civ/2023/534

Para 3 is a bit odd, as there is nothing in s13, 28 or s86 IHTA 1984 that says a 100% family company (i.e. with no non-family employees/directors) cannot qualify for s86 IHTA 1986 IHT exempt EBT status, and yet the High Court and CoA frowned on that as tantamount to tax evasion (indeed s13 & 28 expressly allow this, provided EBT benefits are income taxable, which is now pretty much always the case re P7A ITEPA 2003).

Presumably, this is the point Mr O'Toole would have made had he got his act together. Notably, it was in the Appellants' interest to say it was all fraudulent tax evasion from top to bottom and start to finish to get it set aside and so no-one argued the contrary, so perhaps one cannot blame the CoA too much for this oversight. Unless perhaps it was only the fact that the family beneficiaries actively did not want to receive income taxable EBT benefits that troubled the court, in which case they did not really make it clear that that was the particular problem/concern here and if that's right perhaps they might have mentioned that that was not really Mr O'Toole's problem except to the extent he may have misled the EBT beneficiaries (initially at least) about that being avoidable, but then that's not really tax evasion at all is it? So it's all a bit odd.

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Replying to Justin Bryant:
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By Justin Bryant
24th May 2023 11:07

Or possibly the judges simply wrongly and confusingly conflated aggressive/artificial tax avoidance with fraudulent tax evasion as suggested here: https://www.step.org/industry-news/reversal-trust-scheme-denied-because-...

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