This EBT settlement case resulted in our client being owed money by 
HMRC rather than the other way round.
The client runs a successful telecommunications business which 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.
HMRC incorrectly issued a settlement figure of over £700,000. After considering the APNs already paid, in HMRC’s view, 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.
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.
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.
If you’re an accountant with clients who want to settle an EBT get in touch and we can make the process less painful and more importantly ensure figures quoted are correct and not to your client’s financial detriment. Find out more about how we work with HMRC in relation to settlements and disputes here.
