Employee Benefit Trusts – Settlement Opportunity and Accelerated Payment Notices

The settlement opportunity for EBT’s was to remain open until 9 January this year but we understand that this has now been extended to the end of March.
The HMRC view is that it will allow eligible individuals to pay tax and interest to resolve open years of use of the arrangements and have certainty.
Our view has always been that there is nothing to be gained by making a settlement and that one should either enter into a defence arrangement or simply extract the value of the loans or assets from the EBT.
In July 2014 HMRC published a list of Scheme Reference Numbers (SRNs) where Accelerated Payment Notices (APN)’s could be issued. This includes a number of Employee Benefit Trust schemes including those of Premier Strategies.
The APN tax legislation in Finance Act 2014 allows HMRC to issue an APN to demand payment from clients who used planning with listed SRNs. An APN does not conclude the argument but it does oblige taxpayers to make payment up front. If clients made such a payment and then eventually won litigation on the planning then the tax paid under an APN would be refunded with interest.

Before issuing APNs for EBTs HMRC are waiting for the equivalent National Insurance Contribution (NIC) legislation to be enacted – probably later this month.

We understand around 25% of EBT holders have “taken advantage” of the Settlement procedure so far. If that is correct then 75% of EBT holders are either sitting on the fence or are engaged in a defence scheme.
We wonder if that is wise as in many cases they are liable to pay both trustee fees and BIK charges for some years to come anyway. We have successfully dealt with the extraction of numerous EBT’s using our bespoke planning ….so why play sitting duck?
We may be able to turn your EBT problem into a planning opportunity.

Ray L Best

About Ray L Best

Ray Best has had over 30 years experience of advising on complex financial matters. A published author of a number of books including “Partnership and Shareholder Protection”, Inheritance Tax Simplified”. We provide an initial meeting at no cost and only engage with clients when we can add significant value.
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