Still gathering requirements...
Obviously as we now all know, EBT are no longer viable as a tax mitigation strategy with effect from 9th December 2010.
Originally Posted by Emigre
The announcement, made to allow Hector to use anti-forestalling (the legislation only comes onto the books in April 2011 but because they announced it on 09/12/2010, it is deemed to be effective from that date) mechanisms means that any money drawn down from and EBT or "other" trusts for the benefit of employees from 09/12/2010 will be treated as income with full PAYE liabilities.
Many scheme operators were left floundering by this announcement and are currently swelling the coffers of learned QC across the land seeking approval for their "new" schemes.
There appear to be two schools of thought on this (there maybe more but 2 is all I can find). First approach is to change the status of members of the scheme from employees to sole traders, thus presumably meaning that the trust that is created for the benefit of members is now not for the benefit of "employees". The second approach seems to be to use remuneration trusts which are not "employee" benefit trusts at all but really an inheritance tax mitigation strategy.
Unlike EBT which are considered "tax avoidance" strategies reportable to Hector, remuneration trusts are not. They are not reportable to Hector under tax avoidance rules and the money in them does not need to be declared.
Sounds lovely but the announcement on 09/12 speaks of a very broad church. Until the actual legislation is seen in April, I personally think (as do a couple of tax specialists to whom I have spoken) that there is a significant risk attached to using a remuneration trust vehicle in this way (earnings from a contract being paid into one). It may be that in April the legislation does not cover remuneration trusts at all and it will be an option but it will be very surprising if it doesn't.
Hector is covering as many bases as possible by stating that organisations involved in the process would only be able to circumvent the legislation “(if the loan or payment) is not connected (directly or indirectly) with, an arrangement which has a tax avoidance purpose”. This would seem then to go wider than EBT and cover any arrangement such as a remuneration trust.
I reiterate, there will only be any certainty once the actual legislation is made public in April.
In the immortal words of the Sarge from Hill Street Blues, "hey, let's be careful out there".
Good luck all.