Match lost

Liability to PAYE of payments to an employees’ remuneration trust

A group of companies including Rangers Football Club created an employees’ remuneration trust for the employees and their families. The companies paid money into it and directed the trustees to set up a sub-trust for each employee. A loan facility was also made available to staff. The point in dispute was whether the payments into the trust and loan accounts should be taxed as emoluments (TA 1988 s 19(1)) or earnings (ITEPA 2003 s 62).

HMRC said the payments were made by the employer to the employees and were therefore subject to tax and National Insurance. They issued assessments against which the taxpayers appealed.

The First-tier Tribunal allowed the taxpayers’ appeal and the Upper Tribunal upheld that decision. The Court of Session allowed HMRC’s appeal. It held that income derived from an employee’s work was assessable...