Rangers Football Club is in liquidation, and it is certainly one of the high-profile cases in recent years. HM Revenue & Customs has brought up a tax case against the previous company behind the club, where it has been determined that an employee benefit trust was used by the management and employees to evade tax. All PAYE that must have been paid under the scheme is due to HM Revenue & Customs, taking their claim in liquidation to £72 million. The decision was taken on July 5, 2017, which means that HM Revenue & Customs can issue follower notices until July 4, 2018.
Knowing the background
When contracts were negotiated, employees were advised to go for advanced loans, which will be dealt through contributions made to an employee remuneration trust. While this allowed the option to avoid the PAYE scheme, it also induced certain indemnity for the employees, which now stands worthless as Rangers Football Club is in liquidation. Employees were given time till May 31, 2018, to settle negotiations for the estimated tax on the funds they received with HM Revenue & Customs. It is believed that many may have to deal with bankruptcy or sequestration.
Dealing with follower notice
Follower notices with accelerated payment notices can be issued when a final judicial ruling has been given, and such notices must be issued within a year of the ruling date. When a company or individual gets a follower notice, their tax returns must be corrected within the date stated on the notice. An accelerated payment notice is also sent that determines the amount due, which must be submitted to HM Revenue & Customs. Usually a period of 90 days is given to settle the same. In case of non-compliance, HM Revenue & Customs will further issue a penalty for 50% of the accelerated payment notice. This penalty can be reduced, but a minimum of 10% must be paid.
Many companies with such notices often end up in insolvency on a balance sheet basis. If you want to settle the matter, do not ignore a follower notice and engage with HM Revenue & Customs at the earliest, or a winding up petition can be issued against your company. In some cases, an arrangement can be made for businesses that are still viable. You can be asked to sell property to pay the tax or may need to make regular instalment payments from the income. When you don’t have other financial concerns, such agreements can be useful in settling the matter.
In case winding up is not sought, the following options cane considered
- Creditors Voluntary Liquidation
- Obtaining funding to make a settlement
- Company Voluntary Arrangement
- Individual Voluntary Arrangement
Check with experts for more.