The present:

Tens of thousands of contract workers in the UK are currently using payment structures based on Employee Benefit Trusts. Many of these schemes are operated by companies located in ‘offshore’ centres such as Guernsey, Gibraltar and the Isle of Man.

In the 2010 Budget, HMRC has clearly signalled that legislation is on the way to curb their use.

For those companies currently administering EBT’s, this potentially spells the end of the line. This is not the first time HMRC has moved against particular structures:

•With the introduction of ‘IR35’, HMRC sought to ensure ‘employees’ were taxed at full employee levels.

•The Managed Service Company (MSC) legislation removed the use of artificial corporate structures.

•HMRC has pursued a number of high-profile cases to clarify and defend its stance, and to establish precedence.

Following the success strategy followed when the MSC legislation was introduced, HMRC are likely to restrict available information to give providers as little room to restructure their services as possible.