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The practical issues outstanding following Rangers

Speed read

In what was the final decider between HMRC and Rangers in their long-running litigation, the Supreme Court awarded victory to HMRC by upholding the Court of Session’s decision to treat loans made from employee benefit trusts (EBTs) as taxable earnings. The Supreme Court accepted that payments to the Rangers trusts amounted to an employee’s ‘redirection of earnings’ and were therefore subject to income tax and NICs. The decision undoubtedly provides a green light for HMRC to pursue companies which did not take up the EBT settlement opportunity and to challenge other contrived structures designed to avoid PAYE and NICs contributions. Clarification is now needed from HMRC on how it intends to use this new approach in the context of not just historic EBT structures, but also genuine employee incentive arrangements.

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