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The Supreme Court has issued its judgement in RFC 2012 Plc (in liquidation) (formerly The Rangers Football Club Plc) v Advocate General for Scotland [2017] UKSC 45 and has agreed with HMRC that loans made to employees under the club's EBT loan scheme were in fact remuneration and so subject to tax and NIC.

Case through the courts

In 2012 the First-Tier Tribunal (FTT) found in favour of Rangers:

HMRC appealed to the Upper Tribunal (UT) on the basis that it was disguised remuneration, not loans

In 2014 the UT reaffirmed  the FTT view that they were genuine loans:

HMRC were later granted leave to appeal to the Inner Court of Session (CS)

In 2015 the CS allowed HMRCs appeal:

Rangers appealed to the Supreme Court

The Supreme Court issued its decision on 6 July 2017, dismissing Rangers’ appeal

It should be noted that this case will have no impact on the current Rangers Football Club, which are a different company. Any reference to Rangers above, is to RFC 2012 Plc.

Comment

EBT planning was popular from the 1980s until recently when the disguised remuneration rules were introduced to block loan schemes. A large number of employers were waiting for the outcome of the case and many are now settling with HMRC under the EBT new settlement opportunity. A lay observer may care to note that successive governments and HMRC were either unaware of the extent of this part of the tax avoidance industry, happy to ignore it or were otherwise locked in some kind of unexplained paralysis.

HMRC are likely to continue to issue Accelerated Payment Notices based on the decision.

 

Links

EBT new settlement opportunity

Accelerated Payment Notices

Disguised remuneration

Anti-avoidance: HMRC’s spotlights

Case link: RFC 2012 Plc (in liquidation) (formerly The Rangers Football Club Plc) v Advocate General for Scotland [2017] UKSC 45