LIFECYCLE’S WEBINAR ON THE LEGAL ISSUES SURROUNDING THE 2019 LOAN CHARGE

2nd April 2019

By James Thompson, Senior Associate at Leonard Curtis Legal, part of Leonard Curtis Business Solutions Group – providers of the Lifecycle accountancy network

 

The 2019 Loan Charge is nearly upon us and Lifecyle’s latest accountants’ webinar on this legacy tax avoidance scheme legislation and what it means for their clients is live and free to watch.

Within it, we examine the ruling in what is referred to as the Rangers Football Club’s ‘big tax case’. The landmark decision, taken in 2017, saw the Supreme Court rule in favour of HMRC in its fight with the club over its use of Employee Benefit Trusts (EBTs). More than £47million was paid to players, managers and directors between 2001 and 2010 in tax-free loans, which HMRC argued were earnings and should be taxable.

Over the last few years, various measures to combat tax avoidance have been the subject of numerous judicial reviews, although they have generally found in favour of HMRC. It seems that potential challenges have generally run out of steam now although there is still the ability to challenge HMRC, for example over APNs, if proper process has not been followed.

Also, within our new webinar we examine how HMRC are currently seeking to compel appointed liquidators to take action against company directors for breach of duty, misfeasance and wrongful trading where they have involved the company in such schemes.  This also creates many legal quandaries.

Case law on both areas has developed significantly in recent years and increasing judicial consideration is placed on the conduct of directors in the period preceding an insolvency.

HMRC has used the decision made by the Supreme Court in relation to Rangers Football Club as a precedent to take action against many more historic ‘disguised renumeration’ schemes.

This particular case was extreme, yet at Leonard Curtis Legal we have met with a number of accountants and their clients who find themselves in similar situations. We’re currently working on one case in which we are defending the actions of directors who entered into schemes relying on the professional advice from leading accountancy firms and tax barristers – years before the Rangers FC case was even heard.

Despite HMRC and some insolvency practitioners robustly pursuing such cases, it is clear that, while the legal aspects are complex and still largely untested, there may be situations where the best outcome is to seek to reach a tripartite agreement between directors, HMRC and liquidators in order to bring matters to closure.

For more on the legal issues surrounding the introduction of the Loan Charge – and a wider discussion on the latest legacy tax avoidance scheme legislation and what it means for clients and their accountant advisors – watch the new, free, one-hour webinar here.

Become a member of the Lifecycle network here.

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