Employee benefit trusts and the Rangers case: London opportunity to hear Lord Drummond Young’s thoughts

Rangers Football Club - ATGImages / Shutterstock.com
By Susan Cattell, Head of Taxation (England and Wales)

11 January 2017

The Court of Session found in HMRC’s favour in this important case on the use of Employee Benefit Trusts, reversing earlier decisions by the First-tier and Upper Tax Tribunals.  Ahead of a final decision from the Supreme Court Lord Drummond Young will be speaking in London on “The Rangers Case: HMRC v Murray Group Holdings – Substance and form – the triumph of reality over language?”

Background to the Rangers case

HMRC v Murray Group Holdings and others concerns an employee benefit trust (EBT) for the benefit of employees of a number of group companies, including Rangers Football Club.  

A management services company in the group established a principal trust which was then used as the basis of a scheme involving a large number of sub-trusts for the benefit of the families of employees of certain group companies.  An employee could obtain a loan from his sub-trust which, it was alleged, would provide him with a tax-free sum greater than a payment of salary net of tax deducted under PAYE.

By a majority decision, the First-tier Tribunal found in favour of the taxpayers, holding that loans made to a number of employees (before certain changes in the Finance Act 2011 took effect) were genuine loans and not assessable emoluments. Subsequently the Upper Tribunal upheld this ruling.

On appeal, three judges sitting in the Court of Session in 2015 found unanimously in HMRC’s favour, holding that the funds were ultimately derived as consideration for the employees’ services and on that basis were properly to be considered emoluments or earnings.

For a full analysis of the implications of the Court of Session decision, read Donald Drysdale’s article.

Opportunity to hear Lord Drummond Young speaking in London

Lord Drummond Young was one of the three Court of Session judges and gave the leading judgment in the case.

On 23 February 2017, he will be speaking at the Inner Temple in London on the topic: “The Rangers Case: HMRC v Murray Group Holdings – Substance and form – the triumph of reality over language?”

This is a joint event hosted by the Edinburgh Tax Network, supported by both ICAS and the CIOT, and an opportunity to meet other ICAS tax professionals in London. Book and find out more about the event.


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