When an employer sets up a cash bonus scheme with the desired effect that the employee ends up with a cash bonus, it is difficult for the tribunal to find that the cash is anything other than earnings.

Aberdeen Asset Management PLC v HMRC is one of a string of cases where an employer company paid funds for employee bonuses to its Employee Benefit Trust which injected funds into a series of what the court describes as “money box” companies offshore. Via options granted by family EBTs, the employees ended up having control of their own money box.

The company's appeal to the Upper Tier Tax Tribunal failed: the scheme was found ineffective for PAYE and NICs avoidance.

  • Amounts paid into the EBT were not taxable as bonuses at the time that the company transferred funds (this is where other schemes have failed).
  • The sums contained in the personal companies were found to be readily convertible assets, and so taxable as earnings nnd subject to PAYE and NICs - tax was not recoverable from the employees.


Legislation passed in recent years means that the scope for the use of EBTs in remuneration planning is very limited.

The First Tier Tribunal judgement runs to over 50 pages, so the scheme here was somewhat more detailed than summarised above.

Many schemes are still in existence which abandon the use of EBTs and payment is made directly offshore. At face value these seem completly ineffective for PAYE/NICs avoidance unless the worker is genuinely working abroad.


Aberdeen Asset Management PLC v HMRC [2012] UKUT 43 (TCC)