Strategic Decision: Remuneration Trusts

Published date21 January 2022
Law FirmBerg Kaprow Lewis
AuthorMr Anthony Newgrosh

At best, a tax avoidance scheme works. At second best, it doesn't work, but you end up no worse off for having tried. At worst, you end up far worse off than if you had never got involved.

Strategic Branding ([2021] UKFTT 0474 (TC)) fell within the third category.

The case concerned payments to a remuneration trust, of the sort popularised by the colourful Paul Baxendale-Walker. The general idea behind these arrangements is that a company makes a payment of money to a trust. That money finds its way, via an indirect route, to one or more directors in the form of a (non-taxable) loan - the timing (and even the fact) of the repayment of which is at best uncertain. Meanwhile the company claims to be able to deduct the amount of the contribution in computing its taxable profit.

It's fair to say that remuneration trusts have, like their creator, led an interesting life which has brightened the sometimes mundane world of taxation. It was largely...

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