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Updates from the Clayton & Brewill team.

HMRC loses Rangers EBT tax appeal

14th July, 2014

In a judgment released on 9 July, HMRC has failed in its Upper Tribunal challenge to the employee benefits trust (EBT) scheme previously used by Glasgow Rangers.

Neil South, partner at Clayton & Brewill comments on the case.

This long-running dispute began when HMRC forced Rangers into administration over an unpaid tax bill of £14m. The case was originally heard at the First-tier Tribunal, where HMRC applied in late 2012 to challenge Rangers' use of the EBT scheme, through which it had paid players and staff nearly £50m in tax-free loans between 2001 and 2010.

HMRC argued that the payments should be taxable. Rangers, and their advisers, argued that the payments were loans that could be repaid and therefore tax-free.

The First-tier Tribunal found in favour of Rangers and so HMRC appealed the decision, bringing the case to the Upper Tribunal in February of 2014.

Unfortunately for HMRC – although perhaps a little predictably given the similar EBT challenges that had gone before – the ruling was upheld in the Upper Tribunal, which found there was to be no PAYE or NIC due on the payments made within the EBT.

HMRC now has one month to decide whether or not to appeal and take the case to the Supreme Court.

Our view?

This is good news for clients with EBTs that were set up before the legislation was tightened in the Finance Bill of March 2011, and it will be interesting to see if HMRC can find grounds to appeal the decision.

New tax strategies are always being developed by the providers that we work with – talk to us as and we can help you identify which options are currently available for you and your business.

Neil South of Clayton & Brewill chartered accountants

Contact Neil South on 0115 950 3044 or by email.

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