Harrow (PRWEB UK) 5 March 2014
Charterhouse advised Forde and McHugh Limited in the establishment of a pension scheme for the benefit of the director in 2002. The scheme is known as a Funded Unapproved Retirement Benefit Scheme or FURBS for short and is a commonly used way for business owners to make provision for their retirement.
The company transferred cash and treasury stock worth £170,000 to the pension scheme, following which HMRC argued that National Insurance Contributions (NIC) were due in respect of these assets.
The amount of NIC involved in the case of Forde and McHugh Limited was £20,000 and yet challenging HMRC would have cost significantly more than the amount at stake.
Charterhouse, however, recognised that HMRC’s claim was wrong and committed to defend the client’s position. To do this, it identified other parties that were interested in the matter and, having done so, put together a fund to take the case forward. As it transpired, the challenge went all the way to the Supreme Court.
The matter was listed for appeal and was initially heard by the Upper Tribunal which decided in favour of Forde and McHugh Limited. A subsequent Court of Appeal hearing took place in December 2011 and a decision was issued in May 2012 in favour of HMRC. The decision of the Court of Appeal was appealed to the Supreme Court and the hearing took place in January 2014.
Last week (26 February), the Supreme Court handed down its decision in favour of Forde and McHugh Limited and overturned the Court of Appeal Decision. The Supreme Court is the highest court in the UK and thus it marked the end of a rollercoaster ride for Charterhouse and its client.
The result has been eagerly awaited within the accountancy profession as the outcome may be relevant to other situations where HMRC is seeking National Insurance Contributions on money spent by companies for the benefit of their directors and employees.
The decision, in summary, means that National Insurance Contributions are not payable by companies in respect of the contributions made to a Funded Unapproved Retirement Benefit Scheme. Where companies have made payments on account in the past, these should now be repaid to the company (together with interest). Charterhouse is now helping numerous other clients affected by this decision to obtain significant repayments from HMRC.
“We will always be proactive for our clients where we believe HMRC is wrong,” says Raj Jiwani, Partner at Charterhouse. “HMRC does a difficult and important job, but it does sometimes reach conclusions that need to be challenged. This ground breaking decision will have repercussions across the tax planning and pension planning industries and is a victory for hard working business owners who need to use their business assets to finance their retirement.”
Notes to editors:
- A copy of the judgement is available for download on the Supreme Court Website at http://www.supremecourt.uk/decided-cases/docs/UKSC_2012_0162_Judgment.pdf.
- A copy of the original Upper Tribunal judgement can be found at http://www.bailii.org/uk/cases/UKUT/TCC/2011/78.html and the Court of Appeal decision can be found at http://www.bailii.org/ew/cases/EWCA/Civ/2012/692.html.
- Charterhouse (Accountants) LLP is an independent five-partner firm of Chartered Accountants and Tax Advisers with offices in Harrow and Beaconsfield.
- Established for more than 40 years, it offers a wide range of services for both business and personal financial needs.
- The firm’s services cover tax consultancy and compliance, business planning, audit and accountancy, bookkeeping, company secretarial, estate administration wills and LPAs, business start-ups, tax, and payroll.
- Charterhouse has recently established an HR consultancy service – Charterhouse HR - to advise on HR compliance, recruitment, staff motivation and creating a loyal workforce. http://www.charterhousehr.co.uk
- Charterhouse was named one of the Accountancy Age ‘Best Employers’ in 2011, 2012 and 2013.