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The news that will delight EBT contractors who are selling their homes to pay HMRC

The news that will delight EBT contractors who are selling their homes to pay HMRC

Truly there is one law for the rich and one for the poor – or at least the comparatively poor in this case. It seems HMRC has reportedly seen fit to let Goldman Sachs off a big chunk of the tax bill owed by an EBT scheme they were using to pay bonuses to key personnel.

Regular readers will know about my antipathy to such schemes. I have this quaint notion that if you are a UK citizen and live in the UK and work in the UK you really ought to pay tax in the UK. Using a complex and largely artificial web of subsidiary offshore companies and non-repayable loans isn’t really playing the game.

And it seems HMRC is of a similar mind. They have been pursuing the use of EBTs with increasing vigour of late. A recent clarification of their position about what is counted as earned income widened their net even further. In fact it seems the latest wheeze – where you are no longer an employee of one of the units in the EBT daisy chain but a self employed person – is doomed to failure. Not that I will be losing any sleep over that myself, of course.

And then, in the middle of all this clarification, it seems Mr Hartnett of the HMRC has been involved in the decision to allow Goldman Sachs not to have to pay the interest element on the tax owed on a scheme they stopped using a while back. Fair enough? Well no, not really.

Firstly 22 other companies have been put through the wringer for using the scheme and paid up under an interest-free agreement in exchange for not arguing about it (well, not too loudly, anyway). Goldman Sachs held out for several years on the slightly optimistic grounds that HMRC were pursuing the wrong company. Having finally given up on that approach (mainly because a separate case made it totally untenable) they’ve paid the bill, but excluding the interest due, so saving around £20 million. Which must really delight the guys who are looking at selling their homes to pay HMRC’s demands.

And you may recall Vodafone also had a similar dispensation not to pay a large sum of money as a result of a one-off deal between themselves and HMRC not all that long ago. I hope the directors of Glasgow Rangers are paying attention, since it seems they won’t be benefiting from a similar deal.

Incidentally, it’s interesting to note that Mr Hartnett is still in charge at HMRC. I’m fairly sure I remember reading last year that he had stood down, only to re-appear in the same role as a freelance Interim Manager pending the appointment of a suitable permanent replacement. Clearly experts in tax law are a bit thin on the ground, you con only assume that’s why Mr Inglese, who is head of the legal team, and his three newly-appointed directors, don’t claim any experience of tax law prior to taking up their new posts with HMRC.

But hey, who needs experts? Tax isn’t taxing, remember…

About the author: Alan Watts

Alan has worked in IT for most of the last 35 years, and first went freelance in 1996. He has been a PCG member from its start and has been spreading the message that freelancing is a professional career choice for many years. Alan also runs Malvolio’s Blog, a personal but highly informative take on the life of the modern freelance.

Alan Watts, Principal Consultant, LPW Computer Services

© 2011 All rights reserved. Reproduction in whole or in part without permission is prohibited

Image: Car For Sale (28th/52) by skippyjon

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