Whilst we’re not trying to do HMRC’s job for them, people who have EBTs with investments held offshore in trusts
may want to consider settling for a number of reasons. Possibly they are seeking to divest themselves of their company, either through retirement or sale or possibly their personal circumstances have changed such that they don’t want to deal with a protracted litigation process to resolve the dispute with HMRC.
It’s worth noting there is a very limited time window for such people.
Despite a number of changes to tax legislation people who have EBTs with investments offshore can still take advantage of the transitional relief on investment growth from disguised remuneration tax avoidance schemes. This may be of interest to companies and sub-trust beneficiaries with assets / investments held offshore that are stood at a substantial gain.
The transitional rules allow beneficiaries to withdraw assets / investments, post settlement, without incurring tax on any growth in value.
How it works
A company contributes £250,000 to an EBT in 2009. The trustees allocate £250,000 to the sub-trust of a named beneficiary. The beneficiary did not take a loan and instead requested for the funds to be invested. In 2016 the value of the investment stands at £300,000. Under the transitional rules, a settlement will be based on the original allocation of £250,000. The £50,000 growth will not be subject to tax or NIC when distributed to the beneficiary.
HMRC require any clients considering settlement to register their interest by 31 October 2016 in order to benefit from the transitional rules. The provisions are to be formally withdrawn from March 2017.
If any of the above applies to you or your clients get in touch today to talk to one of our experts who will be able to support you through the settlement process with HMRC.
