Financial advisers with clients who have been pursued by HMRC over inheritance tax liabilities in relation to Employee Benefit Trust (EBT) scheme have been invited to join a group action tribunal appeal against the taxman.
The group action is being led by Manchester tax consultancy Forbes Dawson.
So far, the group action represents clients with over half a million pounds of tax at stake.
HMRC has viewed EBTs as tax avoidance schemes and has imposed inheritance tax charges in respect of those trusts.
When HMRC issues a determination for inheritance tax an appeal must be lodged within 30 days.
Laura Hutchinson, managing partner at Forbes Dawson, has urged advisers with clients facing an EBT-related inheritance tax bill to get in touch ASAP.
She said: “EBTs have been the subject of a longstanding legal challenge brought about by HMRC because they are viewed as avoidance schemes.
“Typically, they were used by companies as a way of extracting remuneration to key personnel via a contribution into an EBT, followed by a loan to the individual. The argument was that the loan was not taxable because it was potentially repayable.
“HMRC was successful in defeating many of these schemes in the courts – most notably in the case of Glasgow Rangers – with the result that the monies were treated as employment income and taxed accordingly. Consequently, many scheme users have chosen to settle with HMRC.
“However, HMRC has subsequently gone on to impose further Inheritance Tax charges in respect of the use of trusts. We have gathered those affected as a group action court appeal.”
Advisers and clients are invited to contact us if they are involved in such a case and are interested in joining our group action, which is likely to be more cost-effective than appealing by themselves.
“However, it is imperative the initial 30-day deadline is complied with.”
The legal case is being handled by tax barrister Ximena Montes Manzano of Temple Tax Chambers.
