EBT – Rangers case won

Employee Benefit Trusts tax case – Rangers 1 HMRC 0

A first-tier tribunal has ruled that payments made to players and staff at Rangers Football Club in a tax scheme were not illegal.

The scheme was in place between 2001 and 2010 to pay substantial sums to players and staff. It argued that the payments were loans rather than actual earnings and not subject to tax.

Following a challenge from HMRC the club appealed its use of Employee Benefit Trusts (EBTs), arguing that the payments were loans which can be repaid.

The ruling [TC02372] said: “The majority view reflects the argument that the controversial monies received by the employees were not paid to them as their absolute entitlement. The legal effect of the trust/loan structure is sufficient to preclude this. Thus the payments are loans, not earnings, and so are recoverable from the employee or his estate.”

HMRC is now considering an appeal.

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