National Insurance (NI) contributions are due on pre-6 April 2006 employer payments into funded unapproved retirement benefit schemes (FURBS), the Court of Appeal has ruled.
In Forde and McHugh (FML) v the Commissioners of HM Revenue & Customs (HMRC), HMRC imposed an employer NI contribution liability on £163,000 paid into a FURBS during the 2002/03 tax year, only to lose on FML's appeal to the Upper Tribunal.
But the Upper Tribunal's decision has now been reversed -with one judge stating five reasons as to why these contributions constituted earnings paid to or for the benefit of McHugh and were therefore subject to NI.
Consultant LCP said HMRC would be pleased with this result.
"It now appears that they could otherwise have been exposed to repayment claims of up to £8.5m arising from contributions to unapproved retirement benefit schemes. But given the amount riding on this, it will be interesting to see whether it now goes to the Supreme Court," it commented.
FURBS were introduced to provide benefits for pension scheme members with earnings above the pre-existing salary cap.
A-Day, 6 April 2006, introduced a lifetime allowance to pension saving, replacing the salary cap. The use of FURBS consequently significantly decreased.
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