Employee Benefit Trusts (“EBTs”) have received a lot of publicity recently - not all of it positive. Perhaps the most high profile case was the previous incarnation of Glasgow Rangers Football Club using an EBT structure to make loans to its players and other staff.
After a series of unsuccessful cases, the Court of Session in Edinburgh has recently supported HMRC's argument that such loans are really a form of remuneration they should be taxed as such. Rangers argued that as these loans can be repaid - however likely that is - then the payments are not taxable. Rangers have applied for leave to appeal to the Supreme Court.
With offices in Leeds, Sheffield and York, we can offer our EBT legal advice either on a face-to-face basis, by post or email. To get employee benefit trust explained to you, call our team of lawyers on 0333 323 5292 or send us an email. Alternatively, fill in our online form and we will be in touch.
Risks of EBTs
There can be risks in using EBTs. Those risks increase the more "creative" you try to be.
Most companies will opt to stay at the more conservative end of the spectrum, using EBTs in ways that are well established and extremely unlikely to attract undue attention from HMRC.
At Lupton Fawcett our EBT experts, Jonathan Oxley and Melanie List, have many years of experience in using EBTs in what we believe to be the right way.
For example, we have recently put in place an EBT for a successful family-controlled company. The controlling family have placed approximately a quarter of the shares in the company into an EBT and have every intention that those shares will be distributed quite widely as part of an overall scheme to retain and incentivise their key staff. To that end, around 25 employees have been granted tax-advantaged options under the Enterprise Management Incentive (EMI) scheme which will vest based on performance criteria over 3 future financial years. A key employee has additional rights to acquire shares from the EBT.
Another client company, which is majority owned by a venture capital firm, has recently established a Jersey-based EBT for the benefit of a wide range of its employees with the aim that on a sale of the company the shares in the EBT will be turned into cash and that cash then distributed to employees by the trustees of EBT on a discretionary basis.
If you would like a free initial discussion on how the EBTs and other structures or schemes can be used to help retain and incentivise your key employees, please contact Jonathan Oxley at firstname.lastname@example.org, 0113 280 2091 or Melanie List (email@example.com, 0113 280 2065).
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