HMRC to use Rangers Big Tax Case as benchmark in tax avoidance schemes

HM Revenue and Customs has announced it will use the verdict from the Rangers Big Tax Case to help take legal action against other ‘disguised remuneration tax avoidance schemes’.

HM Revenue and Customs has announced it will use the verdict from the Rangers Big Tax Case to help take legal action against other ‘disguised remuneration tax avoidance schemes’.

HMRC became embroiled in a court battle with Rangers over the club’s use of Employee Benefit Trusts, known as EBTs.

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Nearly £50 million was paid to Rangers players, managers and directors between 2001 and 2010 through EBTs, which the club claimed were tax-free loans.

But HMRC insisted that the payments counted as earnings and as a result should be taxable.

And now the taxman is warning anyone using similar schemes to ‘withdraw... and settle your tax affairs.’

The Court of Session found in favour of HMRC following an appeal in 2015 after two tribunals, in 2012 and 2014, had found in favour of Rangers.

In new guidance, HMRC has stated that the court decision means that any employment income paid from an employer to a third party should still be a taxable wage.

According to The Herald, HMRC is planning on widening the net in a bid to catch other disguised remuneration schemes.

The guidance says: “In their decision, the court agreed with HM Revenue and Customs (HMRC) that the tax avoidance scheme used by Rangers Football Club doesn’t work.

“They said that Rangers should have deducted Income Tax and National Insurance contributions from payments they made to the scheme, which was an employee benefit trust (EBT).

“In paragraph 39 of the Court’s decision, they set out the principle that employment income paid from an employer to a third party is still taxable as employment income.

“HMRC’s view is that this principle applies to a wide range of disguised remuneration tax avoidance schemes, no matter what type of third party is used.”