HMRC has published a statement offering employers who have used EBTs an opportunity to come to a settlement with HMRC. This sounds good – until you read it.

HMRC say that in the majority of cases the contributions to the employee trust have a link to the employment. If no relevant step under the (proposed) disguised remuneration legislation has been taken, HMRC will settle on the basis that the whole of the PAYE and NIC is paid plus interest. If an employee has paid any tax on a benefit in kind (e.g., on a beneficial loan), credit for that tax will be allowed.

However, if a relevant step has already been taken, HMRC will require all the tax and NIC to be paid plus interest, but with no (or a reduced) credit for any benefit in kind tax paid. Whilst one understands that HMRC regard EBTs with great hostility, and they have no wish to afford any generosity to those involved, this statement does not seem to offer much by way of incentive to unravel the arrangements.