EOTs

Everyone knows these are being abused for CGT avoidance

Didn't find your answer?

Now, thanks to CIoT, the cat is out of the bag and they even spell out how to do it for those not in the know.

https://www.tax.org.uk/ref833

Replies (7)

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By Justin Bryant
16th Sep 2021 12:45

Compare & contrast with this typical EOT marketing bumpf, with no mention of this CGT loophole under the heading "Why are EOTs suddenly popular?":
https://www.solicitorsjournal.com/sjarticle/Employee%20Ownership%20Trust...

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By Justin Bryant
19th Oct 2021 10:28

Amazing that this EoT CGT avoidance story made The Times newspaper recently per the link below and they even named me & Aweb as a source. At last; my 15 minutes of fame!

https://www.thetimes.co.uk/article/government-is-urged-to-close-a-loopho...

They also quote Andrew Evans of Geldards LLP from the above link.

I must say that I feel a bit miffed now that no journalist bothered to phone me for a direct quote.

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By Justin Bryant
05th May 2023 09:31

I note that HMRC have finally cottoned on to this after nearly 2 years.

"Consultation on Employee Ownership Trusts
The government will publish a consultation later this year on the use and effectiveness of the Employee Ownership Trust (EOT) tax regime, to ensure that the reliefs are targeted closely at incentivising EOTs as an employee ownership business model whilst preventing the reliefs from being used for unintended tax planning."

https://www.gov.uk/government/publications/tax-administration-and-mainte...

At least that's quicker than the 30 years it took them re P B-W RTs: https://www.accountingweb.co.uk/any-answers/why-has-it-taken-hmrc-about-...

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By Justin Bryant
19th Jul 2023 11:19

This gaping CGT loophole is now blocked (the EOT to which the individuals sell their shares must now be UK resident for the sellers to qualify for their CGT tax reliefs).

https://www.gov.uk/government/consultations/taxation-of-employee-ownersh...

Maybe HMRC do listen to me after all?

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Replying to Justin Bryant:
By Ruddles
19th Jul 2023 14:08

Sensible changes, and perhaps HMRC will indeed listen to you if you respond to the consultation. After all, that is all that it is at the moment, so slightly premature to say that the 'loophole' is already blocked.

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Replying to Justin Bryant:
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By Justin Bryant
24th Jul 2023 11:09

In addition to the EOT CGT loophole changes, it’s interesting to note that it's only taken HMRC about 35 years to clamp down on this general IHT/CGT EBT abuse (re PB-W RTs etc.).

https://www.step.org/industry-news/hmrc-plans-restrictions-iht-benefits-...

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Replying to Justin Bryant:
By Ruddles
24th Jul 2023 11:19

"HMRC has published proposed measures ..."

But, as they say, better late than never.

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