OFFSIDE! Court of Appeal Flags HMRC’s Rangers Overreach – VAR-Style Ruling in Currell Puts Genuine EBT Loans Back in Play

HMRC Curbed on EBT Overreach: Court of Appeal Decision in HMRC v M R Currell Ltd [2026] EWCA Civ 445 Sends a Clear Message on the Limits of Rangers

• Posted on behalf of trust and company practitioners –
• With thanks to James Quarmby, Founding Partner, Private Wealth at Stephenson Harwood LLP, for highlighting this important development on LinkedIn. for highlighting the matter
• LinkedIn - https://tinyurl.com/56dtejn5

INTRODUCTION

• As a catch-all weapon against any arrangement involving an employer,
• A trust, and a benefit to an employee or director, trust and company practitioners in Jersey, the UK, and offshore centres have grown increasingly familiar with HMRC’s enthusiastic deployment of:-
• The Supreme Court’s 2017 Rangers decision (RFC 2012 plc v AG for Scotland)
• However, the recent Court of Appeal judgment in HMRC v M R Currell Ltd [2026] EWCA Civ 445 is a welcome and timely correction and:-
• It reminds everyone that Rangers have limits and:-
• That not every trust-funded payment or loan is
• Automatically “earnings” under s.62 ITEPA 2003.

For trust and company practitioners in Jersey and beyond,

• This is, as Quarmby points out, a green light to defend robustly where the facts support it and a reminder to build arrangements that can withstand scrutiny on character, not just purpose.

For my Jersey readers - Why This Matters for Jersey and Offshore Practitioners

• Jersey trusts are frequently used in EBT and employee incentive structures for UK-resident companies and directors.
• HMRC enquiries into legacy EBTs and similar arrangements often land on the desks of Jersey trustees, administrators, and their UK advisers.
• Currell is a strong authority to push back when HMRC tries to treat every trust payment as earnings simply because a benefit reaches an employee or director. It reinforces the importance of:
• Independent trustees acting properly.
• Genuine commercial purpose and documentation.
• Real repayment obligations (with security and realistic repayment prospects).
• It also serves as a useful reminder in broader owner-managed business and private client planning where loan accounts, director borrowings, or trust-funded benefits are in play.

Quick Recap: What Rangers Actually Decided

• In Rangers, the Supreme Court addressed a specific (and now infamous) form of EBT scheme. The employer paid cash to a trust, then to a sub-trust, and finally advanced to employees as “loans” that everyone knew would never be repaid.
• The Court held that those payments were made “in respect of the employees’ services” and were therefore taxable as earnings. The loans were, in reality, disguised remuneration.

That was a landmark win for HMRC.

• But practitioners have watched HMRC treat Rangers as a universal solvent ever since invoking it in enquiries wherever an employer pays money into a trust that then provides any form of benefit, often arguing the trust is a sham or a mere conduit and that everything flowing through it is earnings or miscellaneous income.

The Currell Facts – A Genuine Loan, Not Disguised Remuneration

• The facts in Currell were straightforward and far removed from the Rangers' mischief:
• In November 2010, M R Currell Ltd (a family-run painting and decorating company) paid £800,000 into a newly established Employee Benefit Trust.
• The independent trustees immediately made a genuine, interest-free, five-year loan of the same amount to Mr Currell (director and shareholder).
• The loan was properly documented, secured by a charge over A shares in the company that Mr Currell purchased with the funds, and repayment was realistic and intended.
• Mr Currell had independent means to repay; the First-tier Tribunal (FTT) expressly found it was a genuine loan with a real repayment obligation.
• HMRC assessed the contribution (and/or the loan) as earnings under s.62 ITEPA 2003, essentially arguing that any trust-funded loan connected to employment must be remuneration.
• The FTT agreed with HMRC.
• The Upper Tribunal reversed that decision.
• The Court of Appeal, in a judgment handed down in April 2026, upheld the Upper Tribunal and dismissed HMRC’s appeal.

Three Key Principles from the Court of Appeal

• The Court of Appeal’s reasoning provides practitioners with powerful ammunition:
• Purpose is not the same as character.
• Employers routinely spend money to provide benefits to employees.
• That does not automatically turn the expenditure itself into “earnings”.
• The Court emphasised that you must first characterise the payment properly before deciding its tax treatment.
• A genuine, repayable loan is not earnings.
• An employee who receives a genuine loan with a real obligation to repay is not receiving “money’s worth” or remuneration.
• Any benefit of the loan (e.g., interest-free) is taxed under the separate employee loan rules, not by re-characterising the capital sum as salary.
• The Court noted: “In truth, what Mr Currell got was the Loan. This was not a case of diverting remuneration to the EBT.”
• Rangers have limits.
• Rangers were about the redirection of remuneration that had already been earned.
• It does not abolish the need for a proper s.62 characterisation exercise.
• The Supreme Court in Rangers proceeded on the common-ground basis that the payments to the trust were remuneration; the only issue was whether they could be paid to a third party.
• In Currell, the very character of the payment was in dispute, and
• The Court firmly rejected HMRC’s attempt to extend Rangers into a blanket rule that “employer + trust + benefit = earnings”.
• Importantly, this was a pre-Part 7A ITEPA 2003 (disguised remuneration) arrangement. Arrangements implemented after the 2011 rules came into force would face additional hurdles, but the characterisation principles remain highly relevant.

Practical Action Points and Recommendations

• Review Open Enquiries and Disputes
• If you or your clients are facing HMRC enquiries that rely heavily on Rangers without proper s.62 analysis, cite Currell early and firmly.
• Please request that HMRC confirm the genuine nature of any loan and the actual character of the payment.
• Stress-Test Existing and Legacy Structures
• Confirm loans from EBTs/trusts are properly documented, secured, and carry a realistic repayment obligation.
• Ensure trustees can demonstrate independent decision-making (not acting as a rubber-stamp).
• Gather evidence of repayment intent and ability (e.g., director’s net worth, cash flow).
• Document Future Arrangements Carefully. For any new employer-to-trust contributions followed by benefits or loans:
• Record the commercial purpose clearly.
• Avoid “pre-wired” arrangements that look like disguised cash extraction.
• Consider the separate beneficial loan charge rules where relevant.
• Advise on Part 7A ITEPA Risks
• For post-2011 structures, Currell does not provide a free pass. The disguised remuneration rules can still bite on loans from third parties in certain circumstances. Structure defensively and consider clearance or professional opinions where doubt exists.
• Engage Early with Specialists Jersey practitioners should work closely with UK tax counsel when HMRC challenges arise. The Currell judgment is now essential reading and should be in every response to HMRC on EBT/DR issues.
• Portfolio Review Opportunity: Use this decision as a prompt to review client EBT and trust structures implemented pre- and post-2011. Identify where strong factual distinctions from Rangers exist and prepare briefing notes for clients.

Final Thoughts

James Quarmby is right.

• This decision puts HMRC back in its proper box.
• Currell restores balance and legal certainty. It confirms that genuine, commercial trust arrangements with real loans are not automatically caught by earnings charges simply because a trust sits in the middle.
• Currell restores balance and legal certainty.
• It confirms that genuine, commercial trust arrangements with real loans are not automatically caught by earnings charges simply because a trust sits in the middle…
• A green light to defend robustly where the facts support it  
• And a reminder to build arrangements that can withstand scrutiny on character, not just purpose.”

For trust and company practitioners in Jersey and beyond,

• This is a green light to defend robustly where the facts support it and a reminder to build arrangements that can withstand scrutiny on character, not just purpose.

Sources

Posted on behalf of trust and company practitioners – with thanks to James Quarmby, Founding Partner, Private Wealth at Stephenson Harwood LLP, for highlighting this important development on LinkedIn.

• https://tinyurl.com/56dtejn5

1. Full Court of Appeal Judgment

HMRC v M R Currell Ltd [2026] EWCA Civ 445 (handed down 17 April 2026) Direct free full text (BAILII – official neutral citation version): https://www.bailii.org/ew/cases/EWCA/Civ/2026/445.html

This is the complete, authoritative judgment you can cut-and-paste from or attach.

2. Full Upper Tribunal Judgment (the decision the Court of Appeal upheld)

M R Currell Ltd v HMRC [2024] UKUT 00404 (TCC) Official 33-page PDF (GOV.UK): https://assets.publishing.service.gov.uk/media/6758140af1e6b277c4f79aa8/Decision_-_M_R_Currell.pdf

3.  Quick-access versions (same full judgments):

• Pump Court Tax Chambers (clean hosted copy with summary): https://www.pumptax.com/judgment/m-r-currell-limited-v-hmrc-2026-ewca-civ-445/ (click the “read a copy of the judgment here” link on the page)
• ICLR official transcript page: https://www.iclr.co.uk/ic/2026002522

OTHER SOURCES

1. Macfarlanes – “M R Currell Limited: a cautionary tale for HMRC” (best single article for the “puts HMRC back in its box” language) https://www.macfarlanes.com/insights/102mrv3/m-r-currell-limited-a-cautionary-tale-for-hmrc. Explicitly calls the CA decision a “warning [to] HMRC against over-reaching” and confirms Rangers is distinguishable; a genuine loan not turned into earnings.
2. Pump Court Tax Chambers – Full summary of Court of Appeal judgment [2026] EWCA Civ 445 https://www.pumptax.com/judgment/m-r-currell-limited-v-hmrc-2026-ewca-civ-445/ Detailed neutral extracts from the CA judgment itself; stresses Rangers limits and that a genuine repayable loan is not earnings.
3. Wedlake Bell – HMRC v MR Currell Ltd [2026] EWCA Civ 445 https://wedlakebell.com/insights/bulletins/his-majestys-revenue-and-customs-v-mr-currell-lt/ States the CA decision shows “not every payment made by a company to an employee benefit trust amounts to disguised remuneration”.
4. Ross Martin Tax – CoA rules loan to EBT not earnings https://www.rossmartin.co.uk/sme-tax-news/8911-coa-rules-loan-to-ebt-not-earnings Practitioner-focused confirmation that genuine loans with real repayment obligations fall outside Rangers-style earnings charges.
5. Practical Law (Thomson Reuters) – Contribution to EBT to fund repayable loan https://uk.practicallaw.thomsonreuters.com/Document/Ibf3bf8e53ca311f1839deddf1c806e4b/View/FullText.html Clear analysis that the CA held the contribution and loan were not remuneration under s.62 ITEPA.
6. Official GOV.UK – Upper Tribunal decision [2024] UKUT 00404 (TCC) + FULL JUDGMENT PDF https://www.gov.uk/tax-and-chancery-tribunal-decisions/m-r-currell-limited-v-the-commissioners-for-hm-revenue-and-customs-2024-ukut-00404-tcc Full judgment PDF (33 pages): https://assets.publishing.service.gov.uk/media/6758140af1e6b277c4f79aa8/Decision_-_M_R_Currell.pdf The CA upheld this decision in full; essential primary source on genuine loans not being earnings.
7. ICLR – The Commissioners for HMRC v MR Currell Limited [2026] EWCA Civ 445 https://www.iclr.co.uk/ic/2026002522 Official case summary confirming the CA upheld that the payment was a genuine loan with repayment obligation, not remuneration.
8. Tax Journal – HMRC v MR Currell Ltd https://www.taxjournal.com/articles/hmrc-v-mr-currell-ltd Expert commentary reinforcing the restoration of proper characterisation analysis (purpose ≠ character).
9. Rebecca Murray (LinkedIn post with detailed CA analysis) https://www.linkedin.com/posts/rebecca-murray-74654b125_the-court-of-appeal-has-released-its-decision-activity-7452327565672890368-D6x5 Notes HMRC received “a rare scolding” and that the CA distinguished Rangers on the exact point that loans with real repayment obligations are not earnings.
10. Simmons & Simmons – Interest-free loans to employees as earnings? https://www.simmons-simmons.com/en/publications/cmoblrl3d0124ukkksjmxqh4b/interest-free-loans-to-employees-as-earnings- Confirms the CA held “a loan to an employee will not normally amount to earnings”, directly supporting commercial trust arrangements.