The case of RFC 2012 Plc (in liquidation) v. Advocate General for Scotland (the so-called Galsgow Rangers case) involved the payment of an amount by the employer to a discretionary employee benefit trust (EBT). On the recommendation of the employer, the EBT resettled such amount on a sub-trust in the name of the relevant employee, who was granted a loan by the sub-trust of the relevant amount. The Supreme Court agreed with the Court of Session's 2015 decision that the payment by the employer to the EBT constituted employment income of the employee on which the employer should have accounted for income tax and national insurance contributions through PAYE. It was found that the payments to the EBT constituted remuneration for the employee's employment and that it was irrelevant that such remuneration was paid to a third party rather than the employee.

This case predates the introduction of the disguised remuneration rules (Part 7A ITEPA 2003), which were introduced to counteract tax avoidance schemes involving the payment of employment remuneration via a third party (including an EBT), and so the decision is unlikely to have a large impact on EBT arrangements which are subject to these very broad anti-avoidance rules. However, any employer that was involved in a similar scheme predating the disguised remuneration rules, and in relation to which it has not entered into a settlement with HMRC, may expect a follower notice or other demand for tax in light of this decision.

It is yet unclear as to whether the decision will have any broader impact, although HMRC is expected to clarify its position on salary sacrifice and discretionary bonus waivers now that the litigation has concluded.