Where a company wants to settle several Employee Benefit Trusts (EBTs) with HMRC.

Client Challenge

Our client, a successful telecommunications business, had legitimately used EBT arrangements to reward key employees of the company. In line with changes to tax regulations, HMRC issued Accelerated Payment Notices (APNs) against the EBTs which our client had duly paid. The client wanted to settle the EBTs in advance of forthcoming legislation changes and court cases which are set to impact EBT users.

How did Bedrock help?

HMRC incorrectly issued a settlement figure of over £700,000. HMRC’s view after considering the APNs already paid was that the company had over £200,000 still left to pay.

Bedrock were engaged to manage the settlement process, ensuring the company paid the correct amount of tax under settlement.   We produced our own detailed settlement computation and discovered several significant errors:

  • Basic details relating to the EBTs were incorrect
  • IHT charges were incorrectly calculated
  • The Corporation Tax adjustment was incorrect
  • The Benefit in Kind set off wasn’t high enough
  • The final settlement paperwork contained various drafting errors

Initially the client was being passed between different departments within HMRC which caused considerable delay. We were able to speed up the process by identifying the correct team within HMRC whilst also presenting the case to one of our preferred contacts.

Business impact and benefits

We scrutinised and challenged two more settlement calculations from HMRC before agreeing a final figure on behalf of the client. We took away the headache of having to deal with multiple departments within HMRC and secured a much lower settlement figure.

Financial benefits

The final agreed settlement figure was under £500,000 and when the APN payments were taken into account, HMRC in fact owed the client a repayment of more than £40,000.

Working with the Bedrock team allowed the client to settle their tax planning arrangements in a timely and conclusive manner. They were able to focus on running their business rather than worrying about ongoing uncertainties surrounding EBTs and other tax strategies.


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