Murray Group decision 5th July

[JPB]

70. Part 7A of ITEPA was introduced by the Finance Act 2011 (section 26 and Schedule 2) and is designed to tax as employment income, among other things, the value of loans provided by third parties to employees under arrangements to reward employment. This legislation appears to have removed many of the benefits which some believed that the tax scheme gave. More recently, the Finance Act 2017 (section 15 and Schedule 6) has amended Part 7A of ITEPA. But these provisions, which are designed further to counter tax avoidance schemes, cannot affect the interpretation of prior tax legislation.

How does this effect the 2019 loan charge, to me it sounds like the can't go back retrospectively.
Also if I read correctly it says that since the money going into trust fund should be taxed , the applying a tax charge on the loan amounts to double taxation ... but I'm open to be corrected

[PeterF]

Not necessarily, if it is found that the employer was responsible but the employer is no longer a legal entity then there is no way that HMRC can get the cash from them. That shouldn't mean that the liability is then passed to the employee. That is the pyrrhic victory, they have won but they won't see much cash from the IoM scheme organiser. From Rangers yes, as sounds like the assets have been held while the case was concluded so HMRC will be able to recoup some of the cash. Enough to pay for all of this litigation though?

Quite. Makes me wonder what then happens to those affected with many £k paid via APNs. A long road ahead until resolution one way or the other no doubt.

[centurian]

From Rangers yes, as sounds like the assets have been held while the case was concluded so HMRC will be able to recoup some of the cash. Enough to pay for all of this litigation though?

They can probably issue FNs to other solvent companies (probably other footie clubs), which will probably recoup their costs for the litigation.

Will it be the golden egg they were hoping for - doesn't look like it.

[BrilloPad]

Not necessarily, if it is found that the employer was responsible but the employer is no longer a legal entity then there is no way that HMRC can get the cash from them. That shouldn't mean that the liability is then passed to the employee. That is the pyrrhic victory, they have won but they won't see much cash from the IoM scheme organiser. From Rangers yes, as sounds like the assets have been held while the case was concluded so HMRC will be able to recoup some of the cash. Enough to pay for all of this litigation though?

They can get money from other employers that used this scheme. But who cares? They have UNLIMITED resources to throw at this. Then are already badly down on NTRT.

But these provisions, which are designed further to counter tax avoidance schemes, cannot affect the interpretation of prior tax legislation.

Retrospective legislation is quite legal. And even if they weren't, then its the balance outstanding as at 2019 that counts. Of course, the burden falls on the employer(thats the IOM duck for Fred "thicko" bloggs.

[AtW]

Not necessarily, if it is found that the employer was responsible but the employer is no longer a legal entity then there is no way that HMRC can get the cash from them.

Yes, no way to get Employer NICs, but ultimately the responsibility for paying correct amount of tax rests with the taxpayer, all of whom were filing self assessments, they just claimed those were loans, but now that it's established that they were in fact payments covered by PAYE that certainly gives raise to liability for Income Tax/Employee NICs.

That shouldn't mean that the liability is then passed to the employee. That is the pyrrhic victory, they have won but they won't see much cash from the IoM scheme organiser. From Rangers yes, as sounds like the assets have been held while the case was concluded so HMRC will be able to recoup some of the cash. Enough to pay for all of this litigation though?

Many other businesses used EBTs, not all of them gone bust - so HMRC already can get money from them, that's why Rangers case was important even if they could not get a penny from Rangers, but they will from individuals who got the money, that's certainly coming next.

[Whysoserious]

So in summary the loans are to be classed as income and subject to PAYE rules.

Payment of the tax is the responsibility of the employer and not the employee.

The 2019 proposed loan charge is dead in the water as the money under such arrangements is deemed to be income and not a loan.

HMRC win the argument but won't receive a penny from any employee/contractor.

What a complete waste of public money that was.

[BrilloPad]

Yes, no way to get Employer NICs, but ultimately the responsibility for paying correct amount of tax rests with the taxpayer

Not in this case. It will require retrospective legislation.

[BrilloPad]

So in summary the loans are to be classed as income and subject to PAYE rules.

Payment of the tax is the responsibility of the employer and not the employee.

The 2019 proposed loan charge is dead in the water as the money under such arrangements is deemed to be income and not a loan.

HMRC win the argument but won't receive a penny from any employee/contractor.

What a complete waste of public money that was.

They could receive money from other employers. And introduce retrospective legislation.

Why should HMRC care how much it costs? Parliament do as HMRC tell them. My local MP was on the finance committee that approved retrospective legislation in 2008. I went to see him. He had no idea what he was agreeing to. It needs a root and branch reform.

[Dylan]

So, it's crystal clear now that those "loans" are in fact emoluments, something that was obvious from start, yet it required many years of expensive litigation.

No, the loans are loans. The employer should've paid PAYE on the sums placed in to the trust (the emoluments) long before it was loaned to any employee.

[AtW]

Payment of the tax is the responsibility of the employer and not the employee.

Employer was responsible for deducting correct amount of tax on behalf of employee, plus adding Employer NICs as it's own tax.

Employee is totally on the hook for his side of taxes even if employer failed to deduct, it's employee who files self-assessment for his own money, putting "loans" was wrong, so now lots more tax due.

It might take another 5 years of litigation to confirm this another obvious point of view.