Many former clients of Premier Strategies and other members Tax House inspired Employee Benefit Trust arranged are very concerned about the need to make a settlement with HMRC. Should they still be concerned?
HMRC is still having trouble with reclaiming revenue which it believes to be owed, since the tax authority has still to collect up to £2 billion in outstanding tax due from employee benefits trusts.
According to informed sources, less than a quarter of the amount supposedly owed by these sources has been reclaimed. This is despite the fact that it has been two years since HMRC established a settlement scheme for businesses using these trusts to come forward and pay any outstanding tax.
HMRC believes that around 6,500 firms have used employee benefits trusts as a mechanism for paying their top earners and that as much as £3 billion in tax has been essentially ring-fenced by companies adopting these “aggressive” tax avoidance schemes.
Despite the findings in HMRC and Rangers Football Club over the use of such a scheme. A first-tier tax tribunal ruled last year that Rangers has used the scheme legitimately, but HMRC was given the right to appeal in February. Small wonder as we understand that a side letter was issued to football players informing them that although the loans were re-payable on demand “they would never have to pay the loans back” – LOL!
Small wonder that HMRC has already filed its appeal with the upper-tier tribunal.
It seems that companies are resisting settling with HMRC, although HMRC is believed to have recovered around £650 million – a further 400 firms are currently in talks with tax officials, which is expected to raise another £300 million in outstanding revenue.
Nevertheless, HMRC issued a statement saying that it is “pleased” with the progress made so far and is still on target to receive “substantial sums”. The authority added that it has contacted every company known to have used an employee benefit trust in the past and is continuing to chase them for the revenue that HMRC believes is owed.
“We would have liked more people to have come forward by now but the numbers are accelerating as the benefits of settling become more widely known,” the statement explained.
Clearly should HMRC win an appeal in the Rangers case it will put further pressure on firms to settle.