Feedback: 14 September 2023

Potential reporting dilemma

I think JC Morton may have the employee benefit trust (EBT) interest-free loan benefit-in-kind (BIK) analysis wrong in his or her reply to ‘What to do about EBT reporting error’ (Readers’ forum 7 September 2023).

Under Rangers ([2017] UKSC 45) the EBT (and/or the relevant sub-fund) effectively becomes a private trust of the relevant employee (who has settled the trust under the acquiescence principle re his ‘redirected’ earnings); the trust’s capital being an after-tax trust receipt therefore like any other vanilla after tax contribution to a trust. Like any other such trust contribution there should therefore be no BIK issue re any interest-free EBT loan. Of course the fact that HMRC may be out of time to assess the income tax and National Insurance contributions due is neither here nor there to that analysis.

Justin Bryant Blackfriars Tax.

JC...