Roadchef Employees Benefit Trust — House of Commons, 2017-12-19
Topic: Macroeconomics
Melvyn John Stride (Conservative, Centre-right): I am grateful to the hon. Member for Airdrie and Shotts (Neil Gray) for having raised this issue and secured this debate. I congratulate him also on the vociferous energy with which he has pursued these important matters—the Government recognise their importance. I appreciate that this matter is a source of long-standing concern for those affected, and I can fully understand that they would want a resolution soon. I assure the House that HMRC is working hard towards resolving this issue. As the hon. Gentleman has recognised, I am of course constrained by HMRC’s duty of maintaining taxpayer confidentiality, so my remarks on the case will, of necessity, be limited to matters already in the public domain. HMRC will, however, continue to correspond in writing with the trustee chairman and assist the employee benefit trust’s representatives It may be helpful if I first set out the typical tax treatment for the sale of shares from EBTs. When a person exercises an option to obtain EBT shares, this is often chargeable to income tax and national insurance contributions, based on the difference between their valuation when they are obtained and the amount paid for them. If the shares are sold to a third party, the sale will then be subject to capital gains tax on the difference between the valuation used for the taxation of the option and the sale prices Turning to the Roadchef EBT, as we have heard, the issue we are discussing today has a long history. Before the sale of Roadchef in 1998, the company’s then chairman arranged for shares held by the EBT to be transferred to him. He subsequently sold the shares for a profit. Both the acquisition and sale were taxed appropriately at that time. The former chairman’s actions were contested, and in 2014 the High Court ruled that effectively the moneys from the sale of shares had to be paid back, net of tax, to the trust for distribution to its beneficiaries. The judgment stated that the proceeds from the shares sold had been held on constructive trust by the chairman for the beneficiaries. However, the implementation of the High Court’s ruling in 2014 and the subsequent distribution of the original shareholders has proved to be very complex HMRC has since been engaging with the Roadchef employment benefit trustees’ representatives to determine the correct tax treatment for the trust and the relevant distributions to its beneficiaries. This involves HMRC working closely with the trust’s representatives to fully explore all potential legal options to settle this matter. HMRC’s most senior technical people have been working on different aspects of the tax position, and a senior HMRC representative is regularly discussing the progress of the case with the trust’s representative. Several media outlets have also reported how earlier this year HMRC provided a technical analysis of its view of the correct tax treatment to the trustee chairman and its representatives. To be clear, HMRC has no interest in prolonging this matter. It is, however, legally bound to be even-handed and impartial in applying the law.