Newton & Co August Blog through the eyes of John Robson CIMA Member in Practice

On several occasions in our blog we have referred to the Rangers case which has important legal ramifications for anyone who has been or is involved in an employment benefit trust here is an article from Gary Rowson of One E on the case which is now back court in Scotland it is worth a read.

Rangers FC case – Back In Court

21 Jul 2015     Author: Gary Rowson of One E

Earlier this month, three senior judges in Scotland’s Court of Session began to hear HMRC’s latest appeal in the Rangers FC “big tax case”.

Murray Group (the company then running the football club) established an Employee Benefit Trust for Rangers FC players and key company executives. Over a number of years, the group contributed over £40m to the EBT and subsequently created individual family sub-funds for the players and executives.  The Trustees of the EBT made “soft loans” to the beneficiaries.  Despite HMRC arguing otherwise, the Tax Tribunals decided that (1) no liability to PAYE or NIC arose as a result of the contributions to the EBT; and (2) no liability to PAYE or NIC arose as a result of the loans from the EBT to employees.

HMRC’s ongoing argument is that when money is paid for something you did, it is also derived by the earner (i.e. the worker).  HMRC believes the cash payment was part of the remuneration package – it was wages and bonuses earned for work done (i.e. for players appearing in football matches and winning games and for executives performing their roles within the business).

This is now the lead appeal case for EBTs (and similar structures) and the Court’s decision later this year is keenly awaited. Given the potential significance of winning this lead case, one would expect HMRC to attack the PAYE/NIC argument on a very general basis, such that victory would set a strong precedent for the hundreds of EBT cases currently outstanding.

However, word through the grapevine suggests that HMRC is so adamant on winning this case, they may instead adopt a Saunders vs Vautier approach to win the PAYE argument. As readers will be aware, the Saunders vs Vautier case established the precedent that where beneficiaries had an outright claim over trust assets, the assets effectively belonged to the beneficiaries.

In the case of Glasgow Rangers, the sub funds were drafted in such a way that the protector (in this instance, key football players) was able to choose the sub fund’s beneficiaries. This led HMRC to the conclusion that, because the protector could choose his beneficiaries, it was possible for the protector to choose himself or his spouse excluding all others. Under Saunders vs Vautier, this suggests that the entirety of the sub fund belonged to the protector and should therefore be subject to PAYE/NIC.

If it transpires that the sub funds were drafted in this way, then this is a powerful argument in HMRC’s favour. However, while this may result in HMRC winning the PAYE/NIC battle in this case, the facts would be so specific that they may lose the wider war on EBTs in general.

To date, HMRC has lost the PAYE/NIC argument in Dextra, Sempra Metals and Murray Group (at Tax Tribunal).  If it loses again, surely the time has then come to concede defeat and end any further unnecessary EBT litigation?

HMRC’s amnesty period for declaring EBT s and settling the tax owing is drawing to a close so if you know of any one that has such a trust they need to check their position with their trust providers or if they would like an independent review of the trust we can arrange it.


Our business is continuing to grow successfully and a significant factor in this growth has been clients referred to us from you our satisfied customers. We are extremely grateful for this and if any of you know of any friends or colleagues who would benefit from our services or who may have accounts or tax related problems please do not hesitate to pass their details to us or ask them to contact the office. Once again many thanks to all of you who have referred clients to us in the past it is very much appreciated.

The End

I know it’s not something any of us like to think of but death and taxation are the only two certainties in this life we already deal with taxation and now we have linked up with a will writing service that also does pre planned funerals so if you have any need for such are service please give us a call.

On a serious note having a will is critical if you want to pass your estate on to your children in an orderly fashion and there can be serious implications if you don’t have one. If you don’t have a will please give it some SERIOUS thought.

On that happy note enjoy a sunny August!

Leave a Reply

You must be logged in to post a comment.