Reports published in the Sunday Times suggest that Chancellor George Osborne may turn the heat on Employer Financed Retirement Benefit Schemes (EFRBS) on Wednesday’s budget.
The offshore pension trusts, known as EFRBS, will most likely to be termed as a form of “disguised remuneration” in Wednesday’s budget, the paper reported.
The present system enables companies to claim corporation tax deductions for employer contributions since technically the contributions to an EFRBS or a subsequent transfer to a second EFRBS are eligible for ‘qualifying benefits’.
The HMRC however, says neither of the above transactions is eligible for ‘qualifying benefits’.
“HMRC will most likely investigate tax returns where these schemes have been used and see full settlement of tax due, plus interest and penalties where appropriate”, the report says.
In an attempt to tighten the screws, trusts can be subjected to 50 percent income taxes by the government, the paper reported.