Employee Benefit Trust Settlement Opportunity

Employers who used an Employee Benefit Trust (EBT) before 6 April 2011 have until 31 March 2015 to notify HM Revenue & Customs (HMRC) 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 (NIC) liabilities.

The EBTSO is only available to employers who have notified HMRC of their intention to settle under the EBTSO before 31 March 2015. Employers have until 31 July 2015 to pay all amounts due under the EBTSO or have agreed a time to pay agreement with HMRC, if they wish to take advantage of the beneficial terms.

Under the EBTSO the amounts loaned by the trustees to the employees will be treated as remuneration, with the employer paying the income tax and NIC bill. The employer will then be able to claim a corporation tax deduction for the settlement amount for the same period in which the EBT was originally set up. HMRC has indicated that this concessionary treatment will not be available after 31 March 2015. Although late payment interest will be payable on the unpaid tax, no penalties will be due.

For employers who choose not to participate in the EBTSO, HMRC has indicated that they will start issuing Follower Notices and Accelerated Payment Notices (APNs) later this year. This means that users will have to decide before 31 March 2015 whether or not they wish to settle now on potentially better terms or risk paying more (or potentially less) at a later date whilst they wait for their day in court.

For more information and to find out whether or not you are eligible for the EBTSO, please contact our Tax Investigations & Disputes team.


Dominic Arnold