HMRC has been given leave to appeal the decision of the Upper Tier Tax Tribunal that payments made by the club to players via its employee benefit trust (EBT) were loans and not subject to PAYE.
HMRC argues that the loans are not real loans and that as payments which formed part of the employment package of the players they are taxable as earnings.
The club went into liquidation after clocking up some of the highest tax debts in football history. However HMRC is anxious to prove the point that the loans are shams because many other companies are relying on this decision. EBT loans are no longer useful for this type of taxplanning following the addition of Part 7a ITEPA 2003 which will impose a tax charge on any sum of cash "earmarked" for an employee.