Remuneration trusts: the importance of facts

The decision of the Supreme Court in Rangers was considered by many to mark a turning point in HMRC’s battle against employee benefit and other trust arrangements. The Supreme Court held in that case that the taxpayers had ‘redirected’ their earnings into a trust structure, and that PAYE income tax and NICs should have been paid by their employer at the time amounts were contributed on trust. Whilst HMRC invariably relies on the Rangers decision when challenging any loan scheme arrangements, it is a question of fact whether a contribution to a trust is a ‘redirection’ of earnings (Oco and another v HMRC [2017] UKFTT 589). In Marlborough DP Ltd v HMRC [2021] UKFTT 304 (TC), the First-tier Tribunal has determined that a trust scheme designed to extract profits in the hands of an owner-manager did not attract a charge to income tax.