HMRC set 40 day deadline for EFRBS settlement opportunities

November 21, 2013


Many companies use unregistered pensions schemes so as to provide pension benefits to employees above those allowed by registered pension schemes. These are known as employer-financed retirement benefits schemes (EFRBS) and if used as part of your employee remuneration arrangements, you may already be subject to enquiry from HM Revenue & Customs (HMRC).

As a minimum, anyone who has used an EFRBS and has an open enquiry with HMRC should understand exactly what a settlement on HMRC’s published terms would look like, and contrast this with the possible outcome from litigation. We’ve helped many clients understand their current position and when required we’ve gone on to successfully resolve disputes with HMRC.

The announcement of the deadline follows a recent Spotlight article which highlighted HMRC’s view that planning involving EFRBS where corporation tax deductions are claimed in certain circumstances is ineffective. The EFRBS settlement opportunity will allow employers to gain certainty over their current position and settle any outstanding liabilities with HMRC quickly and effectively, without the need to resort to litigation. To benefit from this settlement opportunity, companies must provide HMRC with an expression of interest by 31 December 2013

The tax implications of transactions involving EFRBS can be complex and can potentially involve corporation tax, PAYE, National Insurance contributions (NIC), global double tax treaties and inheritance tax. But by negotiating the most favourable terms available under the settlement opportunity, it’s possible to achieve a beneficial outcome.

If employers don’t voluntarily seek to settle their historic affairs in respect of its EFRBS arrangements, HMRC have made it clear that they will challenge the planning arrangements through the Tax Tribunals and the courts.

The different tax regimes and the unique circumstance of each individual employer’s arrangements mean that the terms of settlement will offer different outcomes in every case. In our experience there are a number of considerations which may mean settlement is the best option: 

  • Ensuring HMRC is legally entitled to recover the tax it’s pursuing and challenging HMRC where it’s not.
  • Making sure any available relief resulting from any agreed tax liability is reflected in the settlement agreement correctly.

For more information or advice please call Jon Preshaw on 0161 245 2337 / [email protected]  or your usual contact in our tax dispute resolution or wider PwC team.

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