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Scottish businesses in line for £400m tax bill

Scottish companies using employee benefit trusts provided by Premier Strategies could face a collective £400m tax bill

25 Feb 2013 Accountancy Age

By Calum Fuller

RSM Tenon

SCOTTISH COMPANIES which used tax avoidance schemes could face a combined tax bill of £400m in order to settle with HM Revenue & Customs.

The schemes, provided by the now-closed RSM Tenon division Premier Strategies, is estimated to have ring-fenced up to £1bn for Scottish businesses over the last ten years, avoiding around £400m in taxes.

Now, however, clients in its employee benefits trusts (EBTs) are being invited to settle with the taxman, with costs expected to reach 40% of the sheltered monies, the Herald Scotland reports.

That invitation follows the news a tribunal ruling which found Glasgow Rangers FC's EBTs was legal could be overturned after HMRC confirmed it would appeal.

The first-tier tribunal had found the corporate entity which formerly housed Rangers, now in liquidation, had legitimately used the scheme between 2001 and 2010 to pay £47.65m to players and staff in tax-free loans.

Tenon shut down Premier Strategies last year after the chancellor announced the General Anti-Abuse Rule (GAAR) would be brought in.

In a report released this month by the Public Accounts Committee, MPs said scheme promoters were "running rings" around HMRC, taking advantage of a "time lag" between the launch of a scheme and any challenge from HMRC.

Premier's EBT clients reportedly received letters warning them that the taxman is pursuing cases against EBTs, adding they had a 20% chance of winning any court case outright, a 60% chance of partial victory and 20% risk of an HMRC victory. A partial victory is likely to see businesses paying around £400,000 for every £1m ring-fenced, while a negotiated settlement would likely lead to payments of £412,000 for every £1m, it said.

A spokesman for RSM Tenon said: "Premier Strategies closed to new business in March 2012, and the former directors of Premier Strategies no longer work for RSM Tenon. Support to clients is now provided by RSM Tenon staff."

The company chose not to comment on the letter to clients.

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