Aberdeen Asset EBT avoidance scheme blocked
An offshore tax avoidance scheme, known as a Discounted Option Scheme, used by an investment management company to pay employees tax-free bonuses, has been closed by the Court of Session
Between 2000 and 2003, Aberdeen Asset Management paid its senior employees and directors over £31m free of income tax and National Insurance Contributions (NICs) using an Employee Benefit Trust (EBT).
The Court of Session agreed with HMRC that PAYE and NICs totalling £7m should be paid on the bonuses, which were converted into shares under the complex scheme.
HMRC’s director-general of business tax commented “This decision will be a big help when we come to argue other cases that are currently in the courts.
“We hope this success will encourage more companies to cut their losses and come forward to settle their EBT liabilities on the basis that this kind of avoidance scheme does not work.”
David Gauke, exchequer secretary to the Treasury added “The tribunal decision sends a clear message to anyone who is tempted to use avoidance schemes: HMRC will pursue you and you’re likely to end up having to pay the tax due, interest and the promoter’s fees as well.”