EBTs Officially Dead!

[Bradley]

Re:Yeah But No But

The recent ruling on EBTs - which basically upheld the previous ruling - is only relevant to UK companies corporation tax re EBT contributions prior to November 2002.

With all due respect there will be a personal effect because all the EBTs set up prior to 2003 will have claimed a deduction that wasn't ultimately due so there will be a shortfall in cash funds if you assume they pay the back tax, interest and penalties. How will they fund the payment of the back tax etc? Either by raiding current funds or by calling in the "loans" advanced to the EBT employees in the first place. If the employees can't pay back the loans then it'll have to be written-off thereby causing a tax charge on the employee.

[supremepods]

The recent ruling on EBTs - which basically upheld the previous ruling - is only relevant to UK companies corporation tax re EBT contributions prior to November 2002.

So, there is no change to personal taxation re EBTs or trusts, and it has no bearing to transactions after November 2002. The tax legislation on EBTs changed in November 2002. Any companies setup after November 2002 operating EBTs will comply with all the new legislation.

[tim123]

What I can't understand is, on the basis of this ruleing (if I understand it correctly), why EBTs were 'invented' for in the first place.

I know that the IR consider that they are being abused when they are set up with a fictional discretion element, but this ruleing seems to have made them useless when the distribution really is discretionary.

What have I missed?

tim

[Darren@UptonAccountants]

EBT's

It was only a matter of time......

[Bradley]

A recent House of Lords case means that anyone using an EBT to avoid tax will soon get a rather large tax bill

http://www.hmrc.gov.uk/practitioners...d-v-dextra.htm