Disguised remuneration: a Supreme Court decision (Spotlight 41)

On 5 July 2017 The Supreme Court released their unanimous decision about disguised remuneration tax avoidance schemes used by Rangers Football Club.

The Supreme Court decision

In their decision, the Court agreed with HM Revenue and Customs (HMRC) that the tax avoidance scheme used by Rangers Football Club doesn’t work. They said that Rangers should have deducted Income Tax and National Insurance contributions from payments they made to the scheme, which was an employee benefit trust (EBT).

In paragraph 39 of the Court’s decision, they set out the principle that employment income paid from an employer to a third party is still taxable as employment income.

What this means for similar disguised remuneration schemes

HMRC’s view is that this principle applies to a wide range of disguised remuneration tax avoidance schemes, no matter what type of third party is used. This includes:

  • EBTs - including variants within these schemes where no loans are made from the EBT but instead the funds remain in, or are invested by, the trust
  • disguised remuneration routed through employer-funded retirement benefit trusts
  • a range of contractor loans schemes

The facts of each case will determine where the earnings point arises based on decided case law.

What could happen if you use one of these schemes

HMRC intends to use this decision to take action against many of the disguised remuneration schemes using the full range of our available tools. This will include HMRC considering, in appropriate cases, whether to issue follower notices and, if relevant, associated accelerated payment notices.

It will also include accelerating litigation where users choose to continue challenging HMRC on their scheme.

What to do if you think you’re using a disguised remuneration scheme

HMRC strongly advises you to withdraw from the scheme and settle your tax affairs. You’ll avoid the costs of legal action and minimise interest and penalty charges on the tax you should have paid.

If you’re already speaking to someone in HMRC about the use of an avoidance scheme, or have a customer relationship manager, you should contact them.

If you don’t have a contact and think you’re in one of these schemes, to settle your tax affairs you should email

Find out more about how to identify tax avoidance schemes.

Published 29 September 2017