View Full Version : Sanzar EBT Rulings News

31st January 2014, 09:14
Hi - just received this from Contractor Helpdesk which is dealing with the Sanzar crisis....dammit....looks like I have to fork out loads of money to HMRC eventually....

Contractor Helpdesk last updated you in October 2013 about HMRC’s current mailing campaign (about the 2009/2010 and 2010/2011 “EBT” years). In that communication we advised you that we would make you aware of any material developments we think you need to know about. A recent tax tribunal ruling meets that definition, so hence we wanted to explain a little more about it.

In December 2013, HMRC won a First Tier Tribunal -Philip Boyle was the appellant - relating to his utilisation of a legacy tax avoidance scheme operating more than a decade ago. This involved him receiving loans in a foreign currency and repayment via future FX trade. Whilst that scheme has a materially different footprint to the majority of schemes that operated in subsequent years, we believe this ruling has ramifications for users of subsequent tax planning schemes. Let us explain...
The Judge’s arguments for their ruling in Boyle are virtually identical to other recent Tribunal rulings that went in favour of HMRC. The rulings cite the “substance over form” argument (which is to view such schemes as merely an artificial series of steps inserted purely for the avoidance of tax). The fact these rulings are so similar has led many observers to suggest influencing by the UK Government and/or media as to how Judges should now interpret tax cases.

We are concerned Judges may no longer be basing their decision solely on facts of tax legislation (i.e. objectively), but to be more subjective with their considerations. This is to say they will be expected to make their own interpretation as to what the tax legislation’s draughtsman intended when legislation was written all those years ago and whether the individual has subsequently derived a benefit that was not intended when the legislation was written.

Some observers have drawn parallels between this shift toward subjectivity with the introduction last year of the General Anti-Abuse Rule (GAAR). The GAAR saw the creation of an “independent” panel who will consider tax cases that HMRC believe to be abusive and consider whether “the spirit” of the law has been observed as well “the letter” of the law. This is a concern given all Queens Counsel (QC) opinion that are the base for tax planning are objective and a literal interpretation of tax legislation at that time. Others see this development akin to the infamous BN66/Double Taxation Treaty “clarification” and retrospective application back in 2008. This controversial change sparked several years of litigation and court rulings, most visibly led by contractor Robert Huitson.

Next month, the Upper Tier Tribunal Judge’s ruling in the long-awaited Glasgow Rangers FC (“Murray Holdings”) EBT case is due. If HMRC were to prevail in that case (as been suggested by insiders) they will doubtless use that as a public platform to encourage those who used legacy EBT schemes (and who currently have successfully submitted an appeal) to get back in touch to settle their positions.

We expect two additional things to happen in February; firstly there will be further dialogue between Cobham Murphy and HMRC (regarding the specific EBT product you used) and secondly HMRC will be keen to showcase any potential new powers arising when the Finance Act 2014 is introduced in April. Accordingly we will continue to keep monitoring those and come back to you as soon as we are able. We thank you for your continued patience.

31st January 2014, 09:16
I've moved this post from General - you won't get the response you expect from there.

12th February 2014, 23:25
[QUOTE=lara400;1880612]Hi - just received this from Contractor Helpdesk which is dealing with the Sanzar crisis....dammit....looks like I have to fork out loads of money to HMRC eventually....

I was using Sanzar solution in 2010 until 2011. I have received a letter from HMRC regarding tax assessment for that period. I have to responed by end Feb. If I Could request you to please provide a appropriate contact to discuss this.

19th February 2014, 15:03
The Rangers appeal hearing before the Upper Tribunal is scheduled for 24 February 2014 - 21 March 2014. In the normal course of events, you would expect a decision to be published about 6 weeks later. But given the length of time scheduled for the hearing and the importance of the case, it may take a little longer.

This is an important not least because of the publicity it will generate. I would be surprised however if this will be the last hearing on the matter as I would expect it to be appealed further regardless of the outcome.

There are 5 companies involved (only one of which has Rangers in its name.)