Warning to expats from HMRC over EBT schemes

HM Revenue & Customs is warning expats and other workers utilising Employee Benefit Schemes (EBT) for tax benefits should declare them and pay up taxes due or face significant fines and court action.

The current disclosure program initiated by HMRC can avoid penalties and legal action in some cases and provide a framework for settlement of taxes.

The program covers various EBT structures and taxes such as:

• Income tax (PAYE)
• National Insurance Contributions
• Corporation Tax
• Inheritance Tax
• Other taxes on EBT's and beneficiaries

Assuming a settlement is agree with HMRC the disclosure program :

• Allows payment to be made to HMRC of taxes due
• Avoids complex and lengthy tax enquiries and legal costs
• Provides certainty and finality to tax liabilities

EBT's were outlawed in January 2011 when HMRC successfully challenged the structure in the case against PA Holdings Ltd. It was determined by the Court and by a subsequent supported by the Court of Appeal that the arrangements avoid PAYE and NIC's through the EBT structures does not work.

Employer-Finance Retirement Benefit Schemes (EFRBS) are also considered not to work.