Loans from EBTs and other Trusts

[blinko]

Just to add to the fun regarding trusts

Rangers owner Craig Whyte is on the brink of tipping the club into administration to avoid £50m tax investigation - Telegraph

[DownButNotOut]

Just to add to the fun regarding trusts

Rangers owner Craig Whyte is on the brink of tipping the club into administration to avoid £50m tax investigation - Telegraph

why are HMRC going after the football club and not the individuals who received wages via EBT's?

[TestMangler]

why are HMRC going after the football club and not the individuals who received wages via EBT's?

Now, that is a good question. Shame we don't have an answer.

[sal626]

Apparently its not the use of the scheme that is being challenged but the administration of the scheme?


"HMRC believes the Ibrox club owes the cash over its use of Employment Benefit Trusts (EBTs) to pay staff over a 10-year period.

It alleges the Ibrox club did not administer the scheme properly and underpaid tax."

BBC News - Rangers and HMRC in race to appoint administrator

[geoff from contracta IOM]

Rangers Tax Tribunal

It's my understanding that the issue is not that an EBT was used ( HMRC lost this fight long ago ) it is that the players contracts stated that they would be paid say 20K per week wages which negated the discretionary element which was key to the effective use of an EBT. There is also the issue of how RFC treated the payments to the trust from a CT perspective.

[BlasterBates]

With contractors in EBT's receiving letters that they're under investigation, of course it's about EBT's. If there was no issue with EBT's we'd all have one wouldn't we.

Let this be a warning to all those in EBT's, the axe is coming down.

[blinko]

It's my understanding that the issue is not that an EBT was used ( HMRC lost this fight long ago ) it is that the players contracts stated that they would be paid say 20K per week wages which negated the discretionary element which was key to the effective use of an EBT. There is also the issue of how RFC treated the payments to the trust from a CT perspective.

I think in the end these trusts will just be shut down totally and everyone will loose out.

I wonder though, seeing as the loan remains outstanding for the rest of your life, does one have to delcare it when taking out a mortgage/loan ??

[geoff from contracta IOM]

With contractors in EBT's receiving letters that they're under investigation, of course it's about EBT's. If there was no issue with EBT's we'd all have one wouldn't we.

Let this be a warning to all those in EBT's, the axe is coming down.

It has already been established that those who used correctly structured EBT's have nothing to worry about and that the letters are not worth the paper they are printed on and there is case law supporting this . The problem is Rangers EBT was not correctly structured with a massive mistake made from the outset.

[BlasterBates]

It has already be established that those who used correctly structured EBT's have nothing to worry about and that the letters are not worth the paper they are printed on and there is case law supporting this . The problem is Rangers EBT was not correctly structured with a massive mistake made from the outset.

The fact that they're still persuing the EBT's means they have a new strategy. Lets face it they're not just going to waste their time repeating whatever they did before. I think we can assume they're not that stupid.

In this particular case they've had success. I also suspect that the scheme managers told Rangers football club that their scheme was fully water tight; and when Rangers perhaps raised concerned after BN66 that the scheme managers told them they had nothing to worry about because HMRC had already lost a case on EBT's. One could also imagine that Rangers football club would have sufficient resources to afford a scheme that they considered to be professionally run.

There are probably other football clubs and contractors who are now being reassured in the same way that Rangers were in the past.

I also presume that the RBS bankers who are now facing a criminal investigation were also assured that their scheme was water tight, and that other schemes that didn't work were badly flawed; but they would have nothing to worry about, because it had been setup correctly.

[slogger]

The fact that they're still persuing the EBT's means they have a new strategy. Lets face it they're not just going to waste their time repeating whatever they did before. I think we can assume they're not that stupid.

In this particular case they've had success. I also suspect that the scheme managers told Rangers football club that their scheme was fully water tight; and when Rangers perhaps raised concerned after BN66 that the scheme managers told them they had nothing to worry about because HMRC had already lost a case on EBT's. One could also imagine that Rangers football club would have sufficient resources to afford a scheme that they considered to be professionally run.

There are probably other football clubs and contractors who are now being reassured in the same way that Rangers were in the past.

I also presume that the RBS bankers who are now facing a criminal investigation were also assured that their scheme was water tight, and that other schemes that didn't work were badly flawed; but they would have nothing to worry about, because it had been setup correctly.

the BIG problem with the ebt schemes is that they're contrived - I've looked at a couple and have been told I will take home 85% of what I invoice - not at all discretionary - and have also been told I wont be asked to repay the loan -- now these have been said verbally and providers wont commit to this in writing - however my worry with them was that the paperwork didnt reflect the reality of the situation and could then be challenged by hmrc.. if the revenue attack the real nature of the arrangement and not the paperwork then I was very worried it could all fall apart.