Supreme Court takes a strong stance on the Rangers EBT case
HMRC is likely to issue follower notices to employee benefit trusts (EBTs) currently under enquiry, where the circumstances match those in the Supreme Court’s decision in the Rangers case, says the CIOT.

www.tax.org.uk/media-centre/press-releases/press-release-supreme-court-take-tough-line-rangers-‘landmark-tax-case’
The Supreme Court has decided1 that tax planning undertaken by Rangers Football Club2 involving an Employee Benefit Trust (EBT) did not succeed in avoiding employment income tax and National Insurance Contributions on amounts paid to the EBT for players and executives. This followed successes by the Club in the First Tier and Upper Tier Tribunals but a reversal in the Court of Session.
Lord Hodge, delivering the judgement of the Court, said that the appeal raised a “fundamental question about the nature of the income tax charge on employment income” but he was ultimately very clear in his view that “the sums paid to the trustee of the Principal Trust for a footballer constituted the footballer’s emoluments or earnings”.
Colin Ben-Nathan, Chair of the CIOT’s Employment Taxes sub-Committee, said:

“We understand that HMRC have a large number of enquiries ongoing into EBTs at the moment and they will therefore feel vindicated by this decision.
“Whilst many employers have already settled with HMRC, for those that have not it is likely that HMRC will now issue “follower notices”3 where they consider that the circumstances sit on all fours with Rangers. These notices will require employers to pay up the tax or face a penalty if they fight on but lose in the courts, neither of which choices will be particularly appealing after the Rangers decision.”

He added that:

“This judgement demonstrates that the courts are taking an increasingly tough line on tax avoidance, adopting a purposive approach and certainly not considering […]

National insurance contribution reversal for an alleged negligent director
FIRST TIER TRIBUNAL CASE
ANTHONY PETER BROUGHTON-HEAD Appellant
– and –
THE COMMISSIONERS FOR HMRC Respondents
The Tribunal determined the appeal on 6 February 2017

Abstract:

Negligent director – balancing of evidence – accruing national insurance years for pension purposes – reinstating contribution years.

Introduction:

Mr Broughton-Head appealed against the decision of HMRC in relation to the payment or non-payment of Class 1 National Insurance Contributions (NICs) between 1985 and 1991. The appeal related to the tax years 1986 to 1989 as they were important to the appellant in respect of his pension.

The appeal was against a decision which stated the the taxpayer had paid nil national insurance contributions during the tax years 1985 to 1991 and he was accused of being a negligent director.

Background:

The Social Security (Contributions) Regulations 1979 makes provision for the treatment for the purposes of contributory benefit of late paid or
unpaid Class 1 contributions. Where the late payment or failure in making payment is shown not to be attributable to the negligence on the part of the primary contributor, the primary contribution is to be treated as duly paid.

The appeal was against the previous decision that the appellant was a negligent director. He was the director of a company called Broughton- Head Timber Ltd (Timber), which was wound up on 19 January 1994.

The Insolvency Section of HMRC investigated matters and concluded that he was a negligent director and that no contributions had been paid for the tax years 1986/87, 1987/88 and 1988/89. The appellant’s contributions for those tax years were removed from his record. Case details regarding the contributions were not available.

The appellant requested HMRC in September 2014 to reverse the removal of the contributions from his national insurance records, which HMRC refused to […]

Pension Relief – availing the opportunity
Although the government has announced that pension relief will be reduced from April 2016, there is still a window of opportunity to utilise any unused relief’s from the last three years.

Pension relief  is the amount that can be paid into a pension fund in any single year tax free. It currently stands at £40,000, however from April 2016 that will fall to £30,000 for everyone. Tax payers who pay income tax at 45% will find this pension relief amount even lower. However, what some people may not realise is that unused contributions from the last three years can be carried forward.

Chas Roy-Chowdhury, ACCA head of taxation, said: ‘£40,000 or even £30,000 may sound like a lot of money to pay into a pension fund but that includes both employer and employee contributions, and for anyone with more than one pension fund it is the total amount spread over the multiple schemes.”

“It is very disappointing the government has chosen to reduce the amount people can save tax free for their retirement. It is another blow to creating a nation of savers – as the Chancellor and Prime Minister pledged to do after being elected in 2010. I would urge everyone that is able to use their full allowance every year, to check whether they have unused allowance from previous years. If you are unsure check with your pension provider, they will be happy to provide you with a statement of contributions for each year.”

“Those hit hardest, again, will be those just entering the workplace. Not only will they have a reduced yearly allowance but also a reduced lifetime allowance. The government seems to be targeting younger workers and making it more […]

General Election Pledges by the Parties
With the General Election round the corner, below are the key points made by the major parties regarding taxation.
The Labour Party’s General Election pledges:

 Introducing a new 10p rate of tax
 Re-introducing the 50% top rate of income tax for people earning over £150,000
No rate increases of Income Tax, National Insurance or VAT
Abolish the controversial non dom status
Review of HMRC’s working practice and culture
Extra powers provided to Scotland so they can make more decisions over tax
Introducing mansion taxes on properties worth over £2m

The Conservative Party’s General Election pledges:

Increasing Personal Allowances to £12,500
Increase the 40% higher rate tax threshold to £50,000
No rate increases in VAT, National Insurance contributions or Income Tax
Married couples to be allowed to transfer their personal allowances of up to £1,060 to their partner, where both partners are basic rate tax payers
Increase the annual non dom charge
Inheritance tax threshold for married and civil couples to rise to £1m

Liberal Democrats’ General Election pledges:

Increase Personal Allowances to £12,500
Consider raising the employee National Insurance threshold to the Income Tax threshold
Set a target for HM Revenue and Customs to reduce the tax gap and continuing to invest in staff to enable them to meet it
Introduce a new offence- corporate failure to avoid economic crime. Introduce penalties for directors and custodial sentences
Increase annual non dom charges
Reform Capital Gains Tax and Dividend Tax relief
Introduce a High Value Property Levy for properties worth more than £2m throughout the UK
Allow Local Authorities to allow council tax of up to 200% on second homes

Green Party’s General Election pledges:

Increase the top rate of income tax to 60%
Increase staff at HMRC by 15,000 per year
Introduce legislation to reduce the tax gap
Replace Council Ta and Business rate with a system of Land […]