HMRC has warned that companies have until 31 July 2015 to settle with HMRC relating to their use of employee benefit trusts (EBTs), or risk facing ‘substantially larger tax bills’ – and possibly litigation.
Companies who had used EBTs had to register their intention to settle with HMRC by 31 March 2015 to benefit from more favourable terms of the EBT settlement opportunity (EBTSO). A formal settlement with HMRC must be agreed by 31 July 2015, including any ‘time to pay’ arrangement where payment cannot be made in full. HMRC has warned that employers who fail to agree to an EBT settlement before 31 July will be brought before the tax tribunal as quickly as possible.
Dominic Arnold, partner at Moore Stephens, said: ‘This deadline is fast approaching, and thousands of companies are yet to settle. HMRC has stated that it intends to bring tribunal cases against users as soon as possible after the deadline. There is a concern that some companies will miss this opportunity to settle on favourable terms. Although HMRC will continue to seek resolution with EBT users after 31 July, it will not do so on the full EBTSO terms.
‘If HMRC is serious in its threat to litigate, we could see a large number of cases relating to EBTs move into litigation from 1 August 2015. Whilst some promoters of EBTs are actively addressing the threat of litigation, others in my experience are not. However, although HMRC has limited resources, it remains to be seen whether it will offer official or unofficial extensions to the settlement regime, especially if there is a late surge of companies trying to settle. However, those who wish to take advantage of the EBTSO should not rely upon this happening and take action now.’
HMRC has warned that companies have until 31 July 2015 to settle with HMRC relating to their use of employee benefit trusts (EBTs), or risk facing ‘substantially larger tax bills’ – and possibly litigation.
Companies who had used EBTs had to register their intention to settle with HMRC by 31 March 2015 to benefit from more favourable terms of the EBT settlement opportunity (EBTSO). A formal settlement with HMRC must be agreed by 31 July 2015, including any ‘time to pay’ arrangement where payment cannot be made in full. HMRC has warned that employers who fail to agree to an EBT settlement before 31 July will be brought before the tax tribunal as quickly as possible.
Dominic Arnold, partner at Moore Stephens, said: ‘This deadline is fast approaching, and thousands of companies are yet to settle. HMRC has stated that it intends to bring tribunal cases against users as soon as possible after the deadline. There is a concern that some companies will miss this opportunity to settle on favourable terms. Although HMRC will continue to seek resolution with EBT users after 31 July, it will not do so on the full EBTSO terms.
‘If HMRC is serious in its threat to litigate, we could see a large number of cases relating to EBTs move into litigation from 1 August 2015. Whilst some promoters of EBTs are actively addressing the threat of litigation, others in my experience are not. However, although HMRC has limited resources, it remains to be seen whether it will offer official or unofficial extensions to the settlement regime, especially if there is a late surge of companies trying to settle. However, those who wish to take advantage of the EBTSO should not rely upon this happening and take action now.’
