In a three-part blog, Jolyon Maugham of Devereux Chambers suggested that the court’s ruling was wrong. The crux, Maugham argued, lies in when the player or employee has ownership over the cash they have received. The fact the money was loaned to the players and staff “muddies these waters” given the cash could technically be recalled to the trusts. “We are taxed on our actual pay ? and not on what we might have been paid had we negotiated a different package with our employer,” Maugham said. “We are free (at least if we do it right) to agree with our employer a package that involves us getting less stuff that does give rise to a tax liability (for example, pay) and more stuff that doesn’t give rise to a tax liability (for example, child-care vouchers or pension contributions). “And if we make that choice then we pay (the lower) tax on our actual pay package rather than (the higher) tax on what we might have negotiated. I’m not sure the court fully appreciates this.” Tax campaigner Richard Murphy, however, is of a different opinion. He claimed the Rangers players and managers all agreed to work for the club. “They did not do so with gratuitous intent,” he said. “Nor did they do so with any expectation that the sums they would be rewarded with would be discretionary. The truth is that everyone working for Rangers knew three things: The first was that they would be paid; the second was they knew how much they would be paid: and the third was that however the EBT was structured these obligations would be honoured.” Advisers do agree the consequences are significant for those operating EBTs. According to Rebus Investment Solutions head of client relations Martin Taylor in an interview with Accountancy Age, “Unless it is overturned in the Supreme Court, it essentially blows out all EBTs and EFRB. In simple terms, the court now says that the technical arguments approved by the commissioners and the tribunal in those cases should have been dismissed by an overriding ?substance over form’ argument. Most firms selling EBT and EFRB structures used very detailed and well-reasoned counsel’s opinions.” This was echoed by Pinsent Masons tax director Paul Noble, who suggested that HMRC would use the ruling to settle with EBT users, with accelerated payment notices and follower notices likely to be called upon. “The basis of the decision was not the result of a small technicality: rather, the judges’ interpretation that ‘common sense’ should prevail and money received as a result of employee services should be taxable,” he said.
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