HM Revenue and Customs (HMRC) has offered employers the opportunity to settle the tax arising on employer-financed retirement benefit schemes (EFRBS).
The settlement opportunity is open until 31 December 2013, with enquiries to be settled by 30 June 2014.
EFRBSs are discretionary trusts set up by an employer to provide benefits for an employee, which are used by earners in the top tax bands looking for ways to reduce their immediate tax deductions on earnings and bonuses.
Organisations are being offered two routes for settlement:
- No deduction is due from corporation tax profits for contributions made to the EFRBS until relevant benefits are paid out.
- Pay-as-you-earn and national insurance contributions are payable on the contributions made to the EFRBS. A deduction can be made from corporate tax profits for contributions made to EFRBS.
Alastair Kendrick, tax director at MHA MacIntyre Hudson, said: ”It is clear that employers that have difficulties in this regard will need to initially take a step back and decide which option is the most relevant given their tax position.
“They should not wait to react, but should seek advice as soon as possible to settle with HMRC.”