header-logo header-logo

One-nil to HM Revenue & Customs

07 July 2017
Issue: 7753 / Categories: Legal News
printer mail-detail

​Taxable income includes money paid to employee or a third party, including a trustee

The liquidators of RFC2012, formerly known as Rangers Football Club, have lost their long-running battle with HM Revenue and Customs (HMRC) at the Supreme Court.

Five Justices unanimously dismissed the appeal by the liquidators over a controversial tax avoidance scheme.

The owners of the famous club, once home to Paul Gascoigne (Gazza), Ally McCoist, Graeme Souness and Lee McCulloch, went into liquidation in 2012. Rangers is now owned by a different company.

Under its former owner Sir David Murray’s Murray Group Management, it gave more than 80 employees more than £47m worth of tax-free loans from off-shore trusts known as Employee Benefit Trusts between 2001 and 2010.

The trust fund would be held for the benefit of the beneficiaries of the sub-trust, who were specified members of the employee’s family. The employee could obtain loans from the sub-trust worth more than if they had been paid through the payroll. Although the loans were repayable, they would be continually renewed until the employee died. Then, the loans and accrued interest would be paid out of their estate, thus reducing their inheritance tax liability.

In 2010, HMRC argued the loans should be classed as earnings and issued a demand for income tax and national insurance contributions.

Delivering the lead judgment in RFC2012 Plc (in liquidation) (formerly The Rangers Football Club Plc) v Advocate General for Scotland [2017] UKSC 45, Lord Hodge said: ‘The central issue in this appeal is whether it is necessary that the employee himself or herself should receive, or at least be entitled to receive, the remuneration for his or her work in order for that reward to amount to taxable emoluments.’

He held that taxable income included money paid to the employee or a third party, including a trustee. However, there are exceptions, including: the taxation of perquisites; where the employer uses the money to give a benefit in kind which is not earnings or emoluments; and an arrangement by which the employer’s payment does not give the intended recipient an immediate vested beneficial interest but only a contingent interest.

Issue: 7753 / Categories: Legal News
printer mail-details

MOVERS & SHAKERS

Birketts—trainee cohort

Birketts—trainee cohort

Firm welcomes new cohort of 29 trainee solicitors for 2025

Keoghs—four appointments

Keoghs—four appointments

Four partner hires expand legal expertise in Scotland and Northern Ireland

Brabners—Ben Lamb

Brabners—Ben Lamb

Real estate team in Yorkshire welcomes new partner

NEWS
Robert Taylor of 360 Law Services warns in this week's NLJ that adoption of artificial intelligence (AI) risks entrenching disadvantage for SME law firms, unless tools are tailored to their needs
From oligarchs to cosmetic clinics, strategic lawsuits against public participation (SLAPPs) target journalists, activists and ordinary citizens with intimidating legal tactics. Writing in NLJ this week, Sadie Whittam of Lancaster University explores the weaponisation of litigation to silence critics
Delays and dysfunction continue to mount in the county court, as revealed in a scathing Justice Committee report and under discussion this week by NLJ columnist Professor Dominic Regan of City Law School. Bulk claims—especially from private parking firms—are overwhelming the system, with 8,000 cases filed weekly
Writing in NLJ this week, Thomas Rothwell and Kavish Shah of Falcon Chambers unpack the surprise inclusion of a ban on upwards-only rent reviews in the English Devolution and Community Empowerment Bill
Charles Pigott of Mills & Reeve charts the turbulent progress of the Employment Rights Bill through the House of Lords, in this week's NLJ
back-to-top-scroll