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HMRC crackdown on EBTs pays off

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15th Jan 2014
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HMRC's crackdown on payroll tax avoidance and employee benefits trusts (EBTs) by the UK’s biggest companies has helped HMRC to double tax receipts from payroll schemes trying to avoid tax.

Figures from law firm Pinsent Masons show that HMRC investigations into payroll irregularities by the UK’s 770 largest businesses made £533m in extra tax, compared to £205m in the previous year.

An EBT is usually a structure set up by an employer for the benefit of its employees and directors or family members.

These can lower the income tax and national insurance charge on remuneration to employees and directors and also generate a claim for corporation tax deductions.

Ray McCann, partner at Pinsent Masons, said that the Revenue had made a concerted effort to crack down on EBTs, which is paying off after starting off slowly.

“Although HMRC has already delivered a dramatic increase in yield from these investigations we don’t anticipate that the revenue will be using this as an excuse to rest on its laurels. We expect even more activity by HMRC in the coming year as they look to close other loopholes with the aim of bringing in even more revenue in 2014.

“For companies with EBT schemes that have been called into question, time is running out. If they do not settle with HMRC they will face direct action and, if HMRC gets its way, far more severe penalties," he said. 

An HMRC spokesman said it did not recognise the figures quoted by Pinsent Mason.  

“We will not allow the abuse of EBTs for tax avoidance purposes. The government has made almost £1bn available to HMRC to police the tax rules and we have specialist inspectors making sure any past abuse of EBTs is effectively challenged and the tax paid."

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By Cannaryman
20th Jan 2014 17:11

Scaremongering!!

If HMRC state they do not recognise Pinsent Masons figures I can see no reason for the article which may well be based on incorrect figures and assumptions.

Also how can Mr McCann state that " If they (taxpayers) do not settle with HMRC they will face direct action and, if HMRC gets its way, far more severe penalties" when clearly this is an unknown.  He is simply scaremongering with the added implication that all EBT schemes will fail.....not necessarily correct!! 

All such articles do is assist HMRC in their pressure tactics to get businesses who have undertaken such planning to pay up without legal justification or case law!!

 

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