Family firms targeted in tax crackdown, warns accountant
A Birmingham accountant is warning that family businesses are being targeted in a £7bn government tax avoidance clampdown. Phil Waller, tax partner in the Birmingham office of Mazars, warned the moves could effectively abolish disguised remuneration schemes such as employment benefit trusts (EBTs) and employer funded retirement benefit schemes (EFURBs).
Waller said: “The rate of tax on such schemes is perhaps one or two per cent against 40-50 per cent – what will be really interesting is whether they seek to do this retrospectively.
They might try but they will find it difficult to make stick. However, there are huge amounts of money involved.”
The government plans to introduce legislation "to tackle arrangements involving trusts or other vehicles used to reward employees, which seek to avoid or defer the payment of income tax or National Insurance Contributions (NICs)".
Waller said: “Basically it could be the end of EBTs and EFURBs and far as significant tax planning is concerned.”
Such trusts are set up to extract profits as efficiently as possible from family firms and are based on the principle of ongoing loans, he explained.
The moves would protect forecast revenues estimated at up to £5bn over the next four years, and were expected to raise over £2bn in additional revenue during the course of this parliament.
