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bigduckontax, Accountant
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Sam I was on a ebt with Sanzar about 5 years ago . Just

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Hi Sam I was on a ebt with Sanzar about 5 years ago . Just got a letter from hmrc looking for an advance payment, through an advance payment notice . Couple of things I only used it for six months then stopped total contract value was about 60k .. i have not sent what I made to them so how can they do an Apn ? I stopped using them at least 6 months before the law changed . So why am j being pursued for something that wasn't illegal aly the time ?? Help :-)
Submitted: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year ago.

Hello, I am Keith, one of the experts on Just Answer, and happy to help you with your question.

Please can you give be a little more information. Sanzar appears to the a Rugby Football organisation of South Africa, New Zealand and Australia so I suspect that I am not on the right track here. HMRC usually ask for an advance payment of half the possible tax due from self employed traders half way through their accounting period.

Were you trading and in the end the contract value below 60K whilst HMRC are under the impression that this was the correct sum?

Did you have dealings via an EBT through Sanzar Partnership? If you did then you should have a look at the following web site which is quite clear that these activities HMRC consider are pure tax avoidance and covered by existing rules. In that case you have 30 days to lodge an appeal against HMRC's demands. EBTs are effectively dead ducks these days following the Finance Act, 2011 which closed the loophole.

http://www.contractoruk.com/news/0011241hmrc_stalks_sanzar_loan_scheme_contractors.html

Contractor UK offers the following advice:

'EBTs come in many guises and with many different names. If you are potentially affected by the changes and/or HMRC action seek specialist advice. In the first instance this advice should come through the sponsoring company or the trustees.

On a positive note EBTs designed to provide share options are often “approved” and such arrangements are not in the HMRC/Government ‘cross-hairs.’ But again, those potentially affected should consult sponsoring employers.'

I do need a little help before I can assist you properly.

Customer: replied 1 year ago.
Relist: Other.
Expert wants more info
Expert:  bigduckontax replied 1 year ago.

Well, like the Israelites, I cannot make bricks without straw.

I have warned you that HMRC view EBTs with the deepest suspicion and have won several cases on appeal. They consider payments by such trusts as simply tax avoidance measures, if not tax evasion and consider the payments earned income subject to Income Tax.

Here is further guidance form Contractor UK:

'Why has HMRC sent tax re-assessments to EBT users dating back to 2008-09?

Once again the answer is straightforward; HMRC believes that any loans from the EBT, or any connected party, relate to earnings in the UK and as such are taxable here.

The reason for issuing assessments at this time is that HMRC’s right to asses 2008-2009 runs out in a few weeks and they are simply protecting their right to collect the 2008-2009 taxes.'

In my opinion you are on a hiding to nothing trying to fight HMRC on this one.

Here is further advice from Turcan Connell, Legal Wealth Management Tax:

'Benefits awarded are generally taxed as employment income. Earmarking funds or advancing a loan to an employee will be subject to tax as employment income on the full value of the sum loaned or earmarked. Loans advanced to employees before the rules changed on 9th December 2010 should continue to be taxed under the benefit in kind rules as employment related loans providing they are genuine loans'

bigduckontax, Accountant
Category: Tax
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Experience: FCCA FCMA CGMA ACIS
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Expert:  bigduckontax replied 1 year ago.
Thank you for your support.

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