The appellant companies entered into arrangements between 2003 and 2004, which broadly involved making indirect contributions to employee benefit trusts (EBTs). The beneficiaries of the EBTs included directors and employees of the appellant companies.
It was hoped that the arrangements would circumvent FA 2003, Sch 24, and enable the appellant companies to claim deductions relating to the cost of rewarding the directors and employees, without those individuals becoming liable to income tax or national insurance contributions in the relevant period or within nine months thereafter.
HM Revenue and Customs decided that the arrangements were ineffective, and amended the appellants’ tax returns. The First-tier Tribunal (FTT) dismissed the appellants’ appeals ([2013] UKFTT 299 (TC)). The FTT held that FA 2003, Sch 24 did not apply to deny a deduction, but that none of the expense claimed was incurred wholly and
