Employee Beneficiary Trusts (EBTs) and Employer Funded Retirement Benefit Schemes (EFRBS)
Background
With the Loan Charge legislation having come into force on 5 April 2019, individuals who participated in EBT and EFRBS schemes (marketing by promoters such as Clavis or OneE) are facing significant tax charges on any loan sums outstanding as at that date.
The legislation reaches back 20 years to 5 April 1999, meaning that many individuals and companies now face life-changing liabilities.
Even where the company in question is no longer trading, HMRC may pursue the individual directly. The legislation continues to attract criticism from respected tax professionals and organisations such as the Chartered Institute of Taxation, who highlight the long-term impact on taxpayers advised in good faith.
How the Schemes Worked
EBTs and EFRBS were marketed as legitimate employee reward strategies, enabling company directors or key employees to receive substantial financial benefits without triggering immediate income tax or National Insurance liabilities.
Typically, the employer would make a contribution to a trust — often offshore — which would then "loan" funds to the individual. These loans were almost never intended to be repaid and were structured to appear tax-neutral. In some cases, bespoke sub-trusts or layered structures were created to disguise the true purpose of the payment.
While these schemes were presented as long-term employee benefit arrangements, HMRC has consistently taken the view that they amount to disguised remuneration. Participants are now being assessed for the full tax and NICs they originally sought to avoid — in many cases, more than a decade later.
Urgency of Legal Advice
Whether you have paid HMRC already, are considering settlement, or have received a demand, it is vital to take legal advice urgently.
If you were advised to invest in an EBT or EFURB and are now facing tax demands, we may be able to help.
If you think your adviser may have received an undisclosed commission for recommending one of these schemes to you, you should take legal advice as swiftly as possible. You may still be able to recover all losses arising from the scheme.
We offer a free, confidential consultation to assess your claim and can notify your former adviser to preserve any insurance cover.
FS Litigation’s Expertise
FS Litigation is one of the very few UK law firms specialising in claims arising from EBT and EFRBS schemes. Our team is ranked by Chambers & Partners and The Legal 500 for our work in high-value tax-related professional negligence.
We have been instructed in numerous claims against the professional advisers who introduced the scheme.
We also work with a team of external tax experts to help protect our clients’ positions when engaging with HMRC.
We have recovered seven-figure settlements on behalf of clients misadvised about these schemes, including cases where HMRC’s settlement opportunities were missed or where advisers actively discouraged clients from settling.
We are ranked Band 1 by Chambers & Partners and recognised by The Legal 500 for our high-value tax and professional negligence litigation.
Chambers & Partners: “The team is especially skilled acting on high-value tax-related disputes.”
Legal 500: “FS Litigation has a national reputation for high-profile, multi-million pound ‘big ticket’ litigation... its team is the envy of many of the top law firms it comes up against.”
Funding Options
FS Litigation offers a range of funding solutions and acts on a contingent (‘no-win, no-fee’) basis in the majority of our professional negligence cases.
Contact Us
To speak confidentially with a member of our team, please contact us or call us on 0161 714 4520