Court blocks bonus tax avoidance scheme
An offshore tax avoidance scheme used by an FTSE 100-listed investment management company to pay its employees tax-free bonuses has been closed by Scotland鈥檚 most senior court.
Aberdeen Asset Management paid senior employees and directors over 拢31 million free of income tax and National Insurance Contributions (NICs) between 2000 and 2003 using an Employee Benefit Trust (EBT).
皇冠体育app Scottish Court of Session last week backed HM Revenue and Customs鈥� (HMRC) argument that Pay As You Earn (PAYE) and NICs should be paid on the bonuses, which were converted into shares under the complex scheme. 皇冠体育app PAYE and NICs at stake in the case totalled 拢7 million.
This is the latest in a series of court rulings against businesses that have tried to avoid PAYE and NICs using schemes involving EBTs. 皇冠体育app scheme used by Aberdeen Asset Management was outlawed in 2003.
皇冠体育app Exchequer Secretary to the Treasury, David Gauke, said:
皇冠体育app Government has made almost 拢1 billion available to HMRC to tackle avoidance and evasion and to ensure that the minority who try to avoid their responsibilities pay the tax due.
This scheme, like so many others, was a waste of time and money. 皇冠体育app tribunal decision sends a clear message to anyone who is tempted to use avoidance schemes: HMRC will pursue you and you鈥檙e likely to end up having to pay the tax due, interest and the promoter鈥檚 fees as well.
Jim Harra, Director General, Business Tax, HMRC, said:
This decision will be a big help when we come to argue other cases that are currently in the courts.
We hope this success will encourage more companies to cut their losses and come forward to settle their EBT liabilities on the basis that this kind of avoidance scheme does not work.