A landmark judgment could see company directors and shareholders pursued for millions of pounds for funds paid into tax avoidance schemes. The ruling, handed down by Chief Insolvency and Companies Court Judge Briggs, will see the directors and shareholders of Implement Consulting Ltd having to pay back over £3 million to the company and its creditors – despite it being placed into liquidation in 2016.
The case was brought by liquidators CVR Global, who were assisted by solicitors Ashfords and barrister Joe Curl. The liquidators successfully argued that the funds placed into Employee Benefit Trusts (EBTs) were effectively dividends by another name and were unlawful.
The judgment could lead to further litigation of EBT-type claims, and is likely to lead to millions of pounds being recovered for creditors.
Richard Toone, Liquidator, of CVR Global, said “This judgment shows what HMRC has maintained all along – that EBTs didn’t work and this landmark ruling could mean many more cases being pursued against the directors and shareholders of insolvent firms.”
“Some may have thought that monies paid into EBT-type schemes would not become an obligation on the individuals. This judgment shows the directors and shareholders are at real risk of being pursued for repayment.”
“This judgment will have major implications for the insolvency industry because the decision provides new case law which can be followed on other cases.”