Edge EBT thread

[varunksingh]

I am not a lawyer or accountant

I am not a lawyer or accountant, so please everyone do not read my posts as facts. My posts are based on my best interpretation of what I have read and understood. Always open to anyone correcting me where I am wrong but please explain - that is what these forums are for. Don't just make statements and when asked for explanation respond by saying "Don't want to do research on my behalf"

[jbryce]

Really?

I'll correct my previous statement as the case is due to be held in public between Jan and March Rangers EBT tax case HMRC appeal to be heard in public, judge rules | Glasgow & West | News | STV (I truely thought it had been held and we were just waiting for the verdict).

I'm not involved in any of these claims (I keep my accounts simple as I like to sleep at night) and others would say that I'm biased but you may want to read http://forums.contractoruk.com/hmrc-...ings-news.html. The bit were insiders feel that HMRC will win is based on ABERDEEN ASSET MANAGEMENT PLC v. THE COMMISSIONERS FOR HER MAJESTY'S REVENUE AND CUSTOMS IN RESPECT OF A DECISION OF THE UPPER TRIBUNAL (TAX AND CHANCERY CHAMBER), 23 October 2013, Lord Drummond Young+Lord Glennie+Lord President which is a binding result that impacts other cases.

I'm sure it adds to the general maelstrom, surrounding these cases, but it is not 'binding' on other cases. This relates to one EBT class of scheme, not all EBTs. It may be a nod/wink/nudge towards other similar cases - but it is by no means binding. The ruling does not state that it is binding to other cases or, indeed, that it impacts them; neither does the other post you refer to.

If you read the HMRC guidance on 'EBT Settlement' they refer to the acceptance that all EBT schemes are complex and that employers and users should contact HMRC to discuss their individual case.

Some EBTs are ineffective, others are not. Luckily 'eek' you will be able to sleep at night; users of DOTAS schemes may have a few sleepless nights before they know one way or the other if their scheme was effective or not. Some will be.

[eek]

I am also not interested in any useless arguments. So last post from my side on this matter and all can see for them selves. Directly COPIED and PASTED below from Rangers decisions

====
197. That view, however, falls to be clarified by the recent opinion of Warren J in Aberdeen Asset Management plc v HMRC in the Upper Tribunal (“AAM”). While that decision post-dates by a few days counsels’ closing submissions in this Appeal, both sent subsequently written submissions on the decision. That case involved benefits to employees by way of share transfers. In para 40 of his decision Warren J interprets Walton J as indicating that payment would result from funds being placed unreservedly at the employee’s disposal, but (perhaps) it was not a necessary condition for payment. However, later in his decision [para 83] Warren J considered that for the purposes of Section 203 ICTA 1988 it was a “… necessary even if not sufficient condition for there to be a payment …” that monies should be unreservedly at the employee’s disposal.
====

Agree 100% with "Remember its only upper tribunal and supreme court decisions that are binding and thats only after the verdict is given". HMRC should also agree with this. AAM was considered and does not apply to Ranger's EBT DIRECTLY ONE FOR ONE. Some parts will always overlap. Similarly AAM decision does not apply to all EBT's ONE FOR ONE.

But that was published prior to the AAM decision (the rangers case was in the FTT from 2009-2011. You really need to read the commentaries from tax experts regarding the AAM case because its not so much the decision that is important but

1) the basis of the decision especially the move from looking at the exact word of the law to interpreting the original aim of the law
2) the approach to the decision is markedly different from that of the majority decision within the Murray case (important as many believe both decisions cover the same point of law / legitimatise of the scheme).

As for your comment regarding HMRC acting on whether decisions are binding its not (until the next Finance Act) in their remit to do so.... It is solely up to a court to decide whether to accept a case / appeal .... All a tax payer / HMRC can do is ask a court whether they will accept the case....

[eek]

I'm sure it adds to the general maelstrom, surrounding these cases, but it is not 'binding' on other cases. This relates to one EBT class of scheme, not all EBTs. It may be a nod/wink/nudge towards other similar cases - but it is by no means binding. The ruling does not state that it is binding to other cases or, indeed, that it impacts them; neither does the other post you refer to.

If you read the HMRC guidance on 'EBT Settlement' they refer to the acceptance that all EBT schemes are complex and that employers and users should contact HMRC to discuss their individual case.

Some EBTs are ineffective, others are not. Luckily 'eek' you will be able to sleep at night; users of DOTAS schemes may have a few sleepless nights before they know one way or the other if their scheme was effective or not. Some will be.

Decisions made in upper courts are automatically binding on lower courts because that is how the law works and always has done. Documents don't need to say its binding because lawyers know how these things work. Once a court is told that this case/scheme looks like x, and agrees it looks like x the result is clear cut and neither side can appeal any further....

That is not to say that each EBT shouldn't have its day in court.

[IPMAN]

The technical term ...

Decisions made in upper courts are automatically binding on lower courts because that is how the law works and always has done. Documents don't need to say its binding because lawyers know how these things work. Once a court is told that this case/scheme looks like x, and agrees it looks like x the result is clear cut and neither side can appeal any further....

That is not to say that each EBT shouldn't have its day in court.

Well I'm definitely no lawyer or accountant in any shape or form, but I think I know what 'Case Law' means. I've used it myself in civil court and it worked.

Incidentally what sort of 'settlement' in terms of percentage are HMRC willing to accept for individual claims against EBT?

[varunksingh]

But that was published prior to the AAM decision (the rangers case was in the FTT from 2009-2011. You really need to read the commentaries from tax experts regarding the AAM case because its not so much the decision that is important but

1) the basis of the decision especially the move from looking at the exact word of the law to interpreting the original aim of the law
2) the approach to the decision is markedly different from that of the majority decision within the Murray case (important as many believe both decisions cover the same point of law / legitimatise of the scheme).

As for your comment regarding HMRC acting on whether decisions are binding its not (until the next Finance Act) in their remit to do so.... It is solely up to a court to decide whether to accept a case / appeal .... All a tax payer / HMRC can do is ask a court whether they will accept the case....

Can someone point me to commentaries from tax experts regarding AAM case. Sorry to say but again does not agree with point 1) and 2) above. They should be provided with reasoning. AAM lost the case in FTT and UTT and those decisions were available to FTT when Rangers case was happening. Does not have full AAM history but this looks like the case to me based on what I could find on internet. AAM was already a failed scheme when Rangers case was heard.

AAM ruling later in court of appeal was not about the scheme working or not. From the AAM ruling Dec 13 - direct copy and paste
====
61] The First-tier Tribunal held that the Scheme failed because the grant of the share options to the FBT did not have the effect of diluting the value of the two original shares at the time they were transferred to the relevant employee. That decision is not challenged. The only remaining question is as to where the liability to pay the income tax on the bonuses paid to the employees under the Scheme lay: with the appellants or with the individual employees? This depends upon whether the transfers under the Scheme fall within the PAYE regime.
====

Also read the below text - again from Dec 13 AAM ruling. Does this happened in EBTs? Courts will decide in due course.
====
The money box company existed by reason of arrangements which had previously been made, the effect of which arrangements was that the employee was able to obtain money by means of, for example, a loan, which would not be repaid, equal to the amount subscribed for the shares. The bundle of rights comprising the shares enabled him to use company law procedures to secure the granting of the loan. The provision of the shares was the culmination of those underlying arrangements. Those were the "trading arrangements", the effect of which was to enable the employee to obtain money.
====

[DonkeyRhubarb]

Template letter for responding to HMRC consultation

NTRT have prepared a template letter for people to respond to the consultation. Please alter it in your own words.

Latest News | No To Retrospective Taxation

Some people will say it won't count if everyone sends similar letters but HMRC will have to report to the Minister how many responses they got. So every letter does count.

[costo]

Help Needed

It's hard to know if the majority of people who are reading this thread are affected or not, regardless of if you are or are not affected your support in this matter is urgently needed.

What is being proposed in the consultancy document gives HMRC powers that allow them to judge people "guilty until proven innocent" and force money to be paid without any court hearing. Could you imagine if you suddenly got a bill for more money than you could possibly afford, that you would be forced to sell your family home or go bankrupt? If you have children can you imagine how this will affect them, when they have done nothing wrong?

If you can empathise, please please take just 5 mins to help us (final date to respond is the 24th of Feb), we need as many people to object to what is being proposed as possible - the last document (Raising the stakes on Tax Avoidance) only 31 people responded (most of those professional bodies), we need many many more.

The letter NTRT guys have put together can be used a template (or even just sign it and send it in)

Latest News | No To Retrospective Taxation

If you were in the situation some of us were in, would you not want to ask everyone possible to help?

[jbryce]

Decisions made in upper courts are automatically binding on lower courts because that is how the law works and always has done. Documents don't need to say its binding because lawyers know how these things work. Once a court is told that this case/scheme looks like x, and agrees it looks like x the result is clear cut and neither side can appeal any further....

That is not to say that each EBT shouldn't have its day in court.

My mistake, I thought you meant that it applied to all EBTs.
EBTs run in a similar manner to the Aberdeen one will be in trouble, however a court has to decide if it's similar, so yes- even similar EBTs would have their day in court.
EBTs come in all shapes an sizes - a bit like nailing jelly to a wall - which is part of HMRCs problem; some of them are effective, other are not. The courts, not HMRC, get to decide.
Still a complete mess though.

[DonkeyRhubarb]

My mistake, I thought you meant that it applied to all EBTs.
EBTs run in a similar manner to the Aberdeen one will be in trouble, however a court has to decide if it's similar, so yes- even similar EBTs would have their day in court.
EBTs come in all shapes an sizes - a bit like nailing jelly to a wall - which is part of HMRCs problem; some of them are effective, other are not. The courts, not HMRC, get to decide.
Still a complete mess though.

Not if HMRC get the "follower case" proposal in the consultation.

Then HMRC get to decide what's similar, without going to court.

Everyone really needs to wake up and smell the coffee.