2017 saw a flurry of letters from HMRC arriving on the doorsteps of Employee Benefit Trust (EBT) users. This is part of HMRC’s ongoing war on ‘tax avoidance’ schemes initiated in 2010. Employee Benefit Trusts have been used extensively since the 1980s to reduce the tax burden on employees. The idea is that salary payments are made not to the employee directly, but are paid to the trust by the employer. The employee then receives loan advances from the EBT.
Phil Wood, Managing Director of Barringtons Corporate Recovery and President of the Staffs, Salop and Wolverhampton Society of the Institute of Chartered Accountants reports that the Q4 insolvency statistics released today show a mixed picture with a reduction on Q3 company insolvencies but a static picture in individual insolvencies. However, these figures are expected to get worse for businesses in Q1 2018, as consumers are tightening their purse strings post-Christmas. ICAEW reminds businesses facing insolvency to seek help earlier and help encourage recovery.
The collapse of construction service giant Carillion Plc, the second largest construction business in the UK, has sent shockwaves throughout the sector. From a reported revenue of £5.2 billion in 2016, the once mighty business collapsed into compulsory liquidation on 15th of January 2018.
This is terrible news for Carillion’s 20,000 direct employees in the UK, as well as its hundreds of clients across the construction, civil engineering and facilities management sectors. The insolvency is also likely to have a big impact on Carillion’s UK sub-contractors, estimated to include 30,000 SMEs.
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Confusion can easily be created when directors are considering dividend payments. The Companies Act 2006 stated that distributions can only be made from “profits available for the purpose”, these being “accumulated, realised profits…less accumulated realised losses”.