Tax Expert Explains Consequences For Players And Companies

The Supreme Court released its Judgement on the so called ‘Rangers’ tax case today ruling in favour of HMRC.

Tax experts at Irwin Mitchell Private Wealth say the judgement handed down today involving the use of Employee Benefit Trusts (EBT) to reward players may have big implications for a number of parties.

The owners of Rangers Football Club at the time used an EBT structure.  They paid monies into the EBT and then on into sub-trusts for the benefit of players and executives.

These trusts then loaned monies to trust beneficiaries (e.g. players) but the loans were not repaid. On the legislation then in place, on the face of it, this avoided PAYE and NIC which would have been payable on salaries. HMRC argued that these transactions should be reconstituted and monies paid into trust reclassified as salary.

HMRC lost at a First Tier Tribunal and Upper Tribunal but on appeal, Scottish Court of Session (equivalent to English Court of Appeal) gave a robust judgement in favour of HMRC. That was appealed to Supreme Court and the Judges today unanimously agreed with the Court of Session in favour of HMRC.

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