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UK Tax Amnesty Deadline Nears For Employee Benefit Trusts

Monday, July 20, 2015

UK companies that previously used Employee Benefit Trusts (EBTs) have until July 31 to take advantage of an HM Revenue and Customs (HMRC) amnesty, or risk substantially larger tax bills, accountancy firm Moore Stephens has said.

According to HMRC, EBT arrangements aim to minimize the income tax and National Insurance charge on remuneration to employees and directors, and may also generate a claim for corporation tax deductions for payments into the trust. Legislation was passed in 2011 to establish beyond doubt that such arrangements or schemes do not work.

Employers who used an EBT prior to April 6, 2011 were required to notify HMRC by March 31, 2015 if they wished to take advantage of the beneficial terms of the Department's EBT Settlement Opportunity (EBTSO) to settle the resulting Pay As You Earn and National Insurance contributions liabilities. The EBTSO is only available to employers who notified HMRC of their intention to settle by this date, and then only for agreements that are entered into before July 31, 2015. The employer concerned must either pay all amounts due under the settlement or obtain a signed "time to pay" agreement from HMRC by July 31.

Moore Stephens warned that if companies that used the schemes fail to settle, litigation will follow. Dominic Arnold, Partner and Head of Tax Investigations and Disputes, said: "This deadline is fast approaching, and thousands of companies are yet to settle. HMRC has stated that it intends to bring tribunal cases against users as soon as possible after the deadline. There is a concern that some companies will miss this opportunity to settle on favorable terms. Although HMRC will continue to seek resolution with EBT users after July 31, it will not do so on the full EBTSO terms."

Arnold added: "HMRC is playing its cards close to its chest regarding the fine detail of the settlement terms it will offer to employers after July 31, 2015. What is certain is that the settlement terms HMRC offers after the deadline has passed will be far less generous, and if cases go to tribunal HMRC will look to recover as much as possible. EBT users may also face Accelerated Payment Notices from HMRC in the coming months, forcing them to pay up front the disputed liabilities in respect of the EBT."

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The Report

Offshore Trusts Guide: Introduction

The History of Offshore Trusts
Development of Professional Competence in the Jurisdictions
What Future for the Trust?
The New Age of Transparency
The Swiss Association of Trust Companies
The Society of Trusts and Estates Practitioners

Offshore Trusts Guide: Jurisdictions

Bahamas

Bahamas: Legal Framework and Formation Rules and Fees
Bahamas: 2006 Private Trust Companies Legislation

Barbados

Barbados: Legal Framework and Formation Rules and Fees
Barbados: Supervisory and Licensing Regime and Fees

Bermuda

Bermuda: Legal Framework and Formation Rules and Fees
Bermuda: Supervisory and Licensing Regime and Fees

British Virgin Islands

British Virgin Islands: Legal Framework and Formation Rules and Fees
British Virgin Islands: Special Trusts Act 2003
British Virgin Islands: The Trustee Act 2003
British Virgin Islands: :Supervisory and Licensing Regime and Fees
British Virgin Islands: New Laws on Private Trust Companies
British Virgin Islands: New Private Trust Company Regulations

Cayman Islands

Cayman Islands: Legal Framework and Formation Rules and Fees
Cayman Islands: Supervisory and Licensing Regime and Fees

Cook Islands

Cook Islands: Legal Framework and Formation Rules and Fees
Cook Islands: Supervisory and Licensing Regime and Fees

Cyprus

Cyprus: Legal Framework and Formation Rules and Fees
Cyprus: Supervision, Licensing and Tax

Gibraltar

Gibraltar: Legal Framework and Formation Rules and Fees
Gibraltar: Legislation, Regulation and Supervision

Guernsey

Guernsey: Legal Framework and Formation Rules and Fees
Guernsey: Trusts Law 2007

Isle of Man

Isle of Man: Legal Framework and Formation Rules and Fees
Isle of Man: Supervisory and Licensing Regime
Isle of Man: Uses Clients and Tax Treatment

Jersey

Jersey: Legal Framework and Formation Rules and Fees
Jersey: Supervisory and Licensing Regime
Jersey: Trusts Amendment Act 2006
Jersey: Foundations

Liechtenstein

Liechtenstein: Legal Framework and Formation Rules and Fees
Liechtenstein: Regulation Supervision and Transparency
Liechtenstein: Characteristics of Liechtenstein Trusts
Liechtenstein: Foundations

Madeira

Madeira: Legal Framework and Formation Rules and Fees

Malta

Malta: Legal Framework and Formation Rules and Fees
Malta: The Trust and Trustees Act 2004

Mauritius

Mauritius: Legal Framework and Formation Rules and Fees
Mauritius: Characteristics of the 2001 Trusts Act
Mauritius: Additional Provisions of the 2001 Trusts Act
Mauritius: Tax Treatment

Monaco

Monaco: Legal Framework and Formation Rules and Fees

Nevis

Nevis: Legal Framework and Formation Rules and Fees

Panama

Panama: Legal Framework and Formation Rules and Fees
Panama: Requirements for Acting as Trust Company in Panama

Seychelles

Seychelles: Legal Framework and Formation Rules and Fees

Turks & Caicos

Turks & Caicos: Legal Framework and Formation Rules and Fees
Turks & Caicos: The Voidable Dispositions Ordinance

Vanuatu

Vanuatu Legal Framework and Formation Rules and Fees




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