Peter Vaines casts his eye over sham loans, the shortcomings of joint bank accounts from an inheritance tax perspective & discovery assessments
The recent case of Murray Group Holdings Limited v HMRC TC 2372 concerned the tax implications of a loan to an employee from an employee benefit trust (EBT). We all know what the implications of loans are now—complete catastrophe—but that was not the case before the introduction of Pt 7A of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003) in April 2011.
Rangers Football Club had an EBT and the trustees made loans to employees and their families. HMRC argued that the full amount of the loans was taxable as earnings in the hands of the employees.
As this case dealt with events prior to April 2011 and you cannot have loans anymore, this may seem to be of rather limited interest. However, it does expose aspects which have a much wider application.
HMRC said that these loans were shams (ie, they were not really loans; they were made
