Payments into sub-trusts for employees and subsequent loans were not earnings or emoluments subject to PAYE and NIC.

HM Revenue and Customs (HMRC) served PAYE Determinations and National Insurance contributions (NIC) Notices of Decision on the respondents (one of whom was formerly Rangers Football Club) arising out of an employees’ remuneration trust established for the benefit of employees of the Murray Group and their families. The First-tier Tribunal (FTT) by a majority allowed the respondents’ appeal (for the tax years 2001/02 to 2008/09) ‘in principle’, deciding most of the contentious issues in their favour ([2012] UKFTT 692 (TC)). HMRC appealed.

The disputed arrangements broadly entailed payments by the employing company of contributions to a principal trust, which at its discretion set up sub-trusts in the names of individual employees of companies in the group for the benefit of their families.(