The result of the Supreme Court’s decision regarding the Rangers football case has provoked HMRC to take more action against a wide range of disguised remuneration tax avoidance schemes. Paragraph 89 of the court decision states that employment income paid from an employer to a third party is still taxable as employment income.
This means that Rangers should have deducted the income tax and National Insurance contributions from payments that they made to the Employment Benefit Trust. The same principle will apply to a wide range of disguised remuneration tax avoidance schemes no matter what type of third party is used. This could be Employee Benefit Trusts, employer-funded retirement benefit trusts or a range of contractor loans schemes.
HMRC said that it will intend to use this decision in order to take further action and will use the full range of their available tools. This includes issuing follower notices and relevant associated accelerated payment notices and accelerating litigation where users continue to challenge HMRC with their scheme.
This is why it’s strongly recommended that users of such schemes should withdraw and settle their tax affairs instead. This will not only avoid the costs of legal but will also reduce the interest and penalty charges on the tax that should have been paid.