Readers' forum : On the way out

I am in negotiations with HMRC to arrive at a settlement figure to close enquiries into a tax avoidance scheme. It involves a trust arrangement that paid loans to employees but I am led to believe it does not fall within the definition of an employee benefit trust (EBT).

The inspector has provided calculations that include inheritance tax based on ‘exit charges’ for the value of the loans to the employees. Although I understand that there is a trust involved in the arrangements it is offshore and held in cash only. It is not therefore clear to me on what basis HMRC can charge inheritance tax.

If there is a valid charge to inheritance tax who would be the settlor in this instance? The money was paid by the company but if the employee is being taxed on the money that went in ...