10 December 2024
MR Currell Ltd v HMRC [2024] UKUT 00404 (TCC)
The company made a contribution to an EBT which loaned the funds to a director. The FTT held that the transactions gave rise to taxable earnings for the purposes of section 62 ITEPA 2003 and Section 3(1) Social Security Contributions and Benefits Act 1992.
On appeal the Upper Tribunal has held that the existence of a connection between the contribution to the EBT and the position of the director is not sufficient for the payment to constitute “earnings” as regard must be had to the character of what the director received, namely a loan (subject to an obligation to repay). The decision in RFC 2012 plc (formerly The Rangers Football Club plc) v Advocate General for Scotland [2017] UKSC 45 is distinguishable, in particular because the parties had agreed that the payments to the trust in that case constituted remuneration. The FTT also erred in holding that, in the vast majority of cases, a loan will confer a “benefit” on the borrower (for employment tax purposes). The Upper Tribunal has therefore concluded that the transactions did not give rise to taxable earnings and allowed the appeal.
Ben Elliott acted for the taxpayer.
You can find a copy of the decision here.
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