Time is running out to use the Employee Benefit Trust settlement opportunity
Published 14 August 2014
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This publication is available at https://www.gov.uk/government/publications/employee-benefit-trusts-settlement-opportunity/time-is-running-out-to-use-the-employee-benefit-trust-settlement-opportunity
This settlement opportunity ended on 31 July 2015. You can still settle after that date, but the treatment of the agreement will be different.
Withdrawal - 31 March 2015
Employers who used an Employee Benefit Trust (EBT) before 6 April 2011 must notify HM Revenue and Customs (HMRC) by 31 March 2015 if they wish to take advantage of the beneficial terms of the EBT Settlement Opportunity (EBTSO) to settle the resulting PAYE and National Insurance contributions liabilities.
The EBTSO will only be available to employers who have notified HMRC of their intention to settle under the EBTSO before 31 March 2015 and then only for agreements that are subsequently entered into before 31 July 2015 with all amounts due under the settlement agreement either paid by that date or with a signed time to pay agreement in place.
Settlements after 31 March 2015
If an employer notifies HMRC after 31 March 2015 that they wish to settle, HMRC will continue to settle appeals by way of agreement where appropriate but not on the beneficial terms of the EBTSO. HMRC’s expectation is that this will mean an increase in the amount on which HMRC is prepared to settle and which, in some cases, could be significant.
Why is the opportunity being withdrawn now?
Since the launch of the EBTSO in April 2011, over 700 employer-level users, with significantly greater numbers of beneficiary employees beneath them, have taken advantage of its terms and settled with HMRC. But it was never intended to be open-ended - HMRC’s other settlement opportunities have defined operational periods. The decision to withdraw the EBTSO will allow HMRC to redirect resources into progressing the appeals of employers who don’t take advantage of the EBTSO by the cut off date. This reflects HMRC’s determination to reduce the use of avoidance schemes and bring enquiries to closure whilst allowing a reasonable period for those wishing to settle to do so. Employers need to make a simple decision, either to settle with us or be prepared to litigate their use of the scheme. And they will need to make that decision soon. Withdrawing the EBTSO now is one of the ways HMRC believe that they can encourage users to reach that decision point.
What are my options?
Employers are invited to contact HMRC to discuss how the terms of the EBTSO would impact in their particular circumstances. If you already have a regular contact at HMRC, please contact them in the first instance.
If you don’t have a regular contact, please get in touch with one of the 4 lead contacts in HMRC for EBTs:
HMRC will make sure you’re allocated one of our specialist team to take forward discussion and agreement of the settlement amounts with you and/or your nominated representative.
What happens if I don’t settle?
HMRC is also directing resource into litigating those who don’t take up the EBTSO, to ensure those cases reach the Tribunal as quickly as possible.