Disguised remuneration: clamp down on EBTs and EFRBS

The Government released draft legislation on 9 December 2010 under the banner of "disguised remuneration". The legislation is aimed at removing tax advantages from the use of employee benefit trusts (EBTs) and Employer Funded Unapproved Retirement Benefit Schemes (EFURBS). The new rules apply from 6 April 2011 with anti-forestalling provisions taxing events taking place on or after 9 December 2010.

The legislation is complex and there is every likelihood it will impact the timing of tax and NIC liability in unexpected circumstances. There are exceptions made for both UK pension schemes and HMRC approved share schemes, but the legislation could adversely affect for example unapproved employee share plans, deferred cash bonus plans and non-UK pension schemes. The likelihood is that any post-8 December receipt from these arrangements will be taxed as income. However much depends on the detail of individual circumstances and it is particularly important that advice is taken on all remuneration strategies - even those not intended to use tax avoidance structures. We are working with our clients to evaluate the implications. If you have any concerns please contact our tax investigations and employer solutions team.

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Tax dispute resolution

With HMRC receiving more information than ever, and the increasing pressure on public revenues, HMRC are expected to use the full extent of its investigatory powers to actively enquire into tax returns with the view of reducing the tax gap.