Sham EOTs

[Franco5]

Not sure whether this is the right forum but are there any genuine employee ownership trusts arrangements out there? The two EOTs I’ve got knowledge of are blatant tax evasion. After the EOT they carried on exactly as they were pre-EOT with the same family management in charge, no employee benefits and no employee control.

[Rough101]

I was involved in one, where basically they sold the business to the business for a massively inflated price, saddling the business with a huge debt, continued to manage it, trustees were absentee at best and given the debt there were none or slim benefits for being in the EOT.

I seen it coming, some poor sods got super excited so felt massively let down.

[Hobo]

Quite simply an exit strategy for owners golf businesses where getting an external buyer is highly unlikely.

So yes, a tax reduction scheme at best, but why not. A lot of the people involved have built the businesses so why shouldn’t they personally gain from their ‘sale’.

[Hobo]

The bigger issue for me is how many businesses appear to fail during the process.