PwC: Tax Investigations Newsflash Employee benefit trusts and disguised remuneration
On 31 March 2011, the Government issued legislation intended to make sure that businesses do not defer or avoid employment taxes. This will affect lots of of arrangements, including those involving employee benefit trusts (EBTs) and employee-financed retirement benefit schemes (EFRBs).
The legislation will mean an immediate income tax charge where an employer uses a trust or a structure to try to benefit any employees, be it directly or indirectly from 6 April 2011. There are also provisions which aim to catch any changes to pre 9 December 2010 structures made before the legislation comes into force.
At the same time as these developments, it's clear from recent HM Revenue & Customs (HMRC) announcements (Spotlight 5 - Using Trusts and similar entities to reward employees and Spotlight 6 - Employer-Financed Retirement Benefits Schemes) that it intends to challenge perceived tax advantages obtained through existing structures. It's HMRC's view that these challenges can be made on the basis of existing case law and legislation in force before the introduction of the new rules.
HMRC hasn't commented yet on how it intends to resolve old enquiries on these issues. It's likely that businesses with these remuneration structures will come under increasing scrutiny from HMRC. Responding to HMRC enquiries in the right way will help businesses to be ready for any changes in HMRC's approach.
How can PwC help you?
There are three key areas where PwC's team can help you and your clients:
Our tax investigations e-newsflashes bring key developments to your attention as they happen. If you would like to discuss anything covered by this newsflash or any tax investigation issue please call our 24 hour helpline on 0800 328 8215 or email tax.investigations@uk.pwc.com. Visit our website:www.tax-investigations.com.
Friday, 1 April 2011
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