Taxable benefit?

JodieRJodieR Experienced MentorRegistered Posts: 1,002
A client of mine pays for a taxi to take an employee home most days as he doesn't drive and it's part of his job to take the cash takings home with him every evening - it wouldn't be safe for him to walk home with the cash, especially in the dark. The taxis wouldn't be a taxable benefit would they?

Comments

  • mini_schnauzermini_schnauzer Trusted Regular Registered Posts: 347
    How does the employee get to work?
  • MonsoonMonsoon Font Of All Knowledge FMAAT, AAT Licensed Accountant Posts: 4,069
    This isn't my area of expertise but I would have thought the set up is complicated by duality of purpose, so it could well be taxable?
  • PGMPGM Font Of All Knowledge Registered Posts: 1,954
    Monsoon wrote: »
    This isn't my area of expertise but I would have thought the set up is complicated by duality of purpose, so it could well be taxable?

    But on work business!

    Another brain teaser :D

    I'd go with it being a legitimate business expense, if, its only when there's taking? The OP says most days, so assuming this means theres days with no cash and the person then makes thir own way home?
  • MonsoonMonsoon Font Of All Knowledge FMAAT, AAT Licensed Accountant Posts: 4,069
    The whole point of duality of purpose is that even though the only reason for paying the money was work, there is an inherent personal use of the expense, and therefore the whole lot is disallowed.

    I'd love to be proved wrong on this one - as I said, not my area of expertise but I would guess the basic principle of duality applies.
  • PGMPGM Font Of All Knowledge Registered Posts: 1,954
    Monsoon wrote: »
    The whole point of duality of purpose is that even though the only reason for paying the money was work, there is an inherent personal use of the expense, and therefore the whole lot is disallowed.

    I'd love to be proved wrong on this one - as I said, not my area of expertise but I would guess the basic principle of duality applies.

    Yeah I totally agree, hopefully Dean or Steve can help clear things up.

    There is duality, but its travel and if you can argue its work travel, with a business need and wouldn't have been an expense otherwise? Its a bit like when I claim expenses for going to the bank, and I get my lunch while out?

    I suppose the person could refuse to do that part of their role if they find out they're going to be taxed on it? (Although unlikely)
  • andrewtdkandrewtdk Well-Known Registered Posts: 150
    As its part of his job to keep the cash at home i wonder if his home could be classed as an office etc therefore making it business travel similar to when a contractor travels from his house to a site? Will be an interesting one and hopefully someone who knows the answer will come along
  • DcollinsDcollins Well-Known Registered Posts: 179
    You could argue that it is not a necessary part of the employee's job. Couldn't your client buy a safe to keep the cash overnight? That would eliminate risk to the employee, and the risk of the client's cash being stolen in transit or while at the employee's house, and erase the problem of tax liability.

    Just a thought.
  • JodieRJodieR Experienced Mentor Registered Posts: 1,002
    Ooo lots of replies, thank you all! but unfortunatly it looks like it's going to have to be another call to HMRC to clear it up (if the client agrees to that of course).
    In answer to some of your queestions - I don't know how he gets to work but I'm guessing he walks or takes the bus. I'm also not sure why it's not EVERY day that he gets a taxi home - maybe if there's only a few quid in the till or if he leaves early then he just makes his own way home. And in answer to D Collins I see your point but I *think* that his wife writes up the cash book and banks the money so it's not going to help leaving it at the premises. Could be wrong - got many more questions to ask it appears!
    I'm wondering whether it can be compared to workers who take a company van home 'for security reasons' - they don't get taxed on that despite there being an 'inherent personal benefit' to the situation.
  • PGMPGM Font Of All Knowledge Registered Posts: 1,954
    JodieR wrote: »
    but unfortunatly it looks like it's going to have to be another call to HMRC to clear it up

    I'd advise against that!

    I started a thread about directors, we've had so much conflicting information from the HMRC that I've given up using them for advice.
  • payrollpropayrollpro Trusted Regular Hampshire/SurreyRegistered, Working Together with HMRC Posts: 418
    Jodie,

    The advice you will get is that the cost is a taxable benefit on the employee. Whatever the intended purpose the basic principle is that it is commuting and the employer is funding it. I liken this to emergency call outs for key holders. There is no exemption for travel costs in such circumstances even if the key holder or nominated person is called out by the authorities.

    Payments towards travel from home to normal place of work and back again is commuting and hence will be a BIK except on the odd occasion where the travel home costs are met which meet the limited exemption under "taxis home". In this case there is a regularity of journey which would fail the tests in that limited exemption and so I cannot see a way around it.

    I agree with Dcollins, HMRC are likely to argue that there is a cheaper way of securing the cash than paying for a tax home so regularly.

    Payrollpro
  • PGMPGM Font Of All Knowledge Registered Posts: 1,954
    payrollpro wrote: »
    I liken this to emergency call outs for key holders. There is no exemption for travel costs in such circumstances even if the key holder or nominated person is called out by the authorities.

    We asked our auditors to cover exactly this question!

    It was said that call out travel is business travel if you've been phoned to come in, because from the phone call onwards you are on work business.

    But if you're coming in to check the building on a random weekend inspection for example, that is standard commuting.
  • payrollpropayrollpro Trusted Regular Hampshire/SurreyRegistered, Working Together with HMRC Posts: 418
    PGM,

    I'd check that because the only time travel from home to normal place of work is allowed is where it is to assist a disabled member of staff, use of company bus, financial assistance to bus companies in order to improve commuting and on the occasion that there is disruption to public transport.

    Reimbursement of travel costs for emergency call outs is a classic, and common, PSA item in order to avoid staff refusing to sign up as key holders, except in certain circumstances.

    Business owners, similarly, cannot charge such call outs for business purposes unless EIM10040 applies.

    EIM10040 makes it clear that there has to be a number of key criteria in place for the journey to qualify as business and only then is it allowable. A bland statement that as soon as you get the call your on business won't be enough.

    Saying that, of course, I don't see that it would be very difficult to record that the person responsible starts by giving instructions and retains responsibility even during the journey. The main problem is that in real life the employee gets a call and simply has to get into the normal place of employment with no real requirement to take charge of the situation from the moment they get the call.

    I think your auditors are working from the basis that HMRC will find it impossible to prove that the call out fails to satisfy the exemption or that it will be so marginal that they won't look at it. I am not sure I would be prepared to rely on that.

    Payrollpro
  • PGMPGM Font Of All Knowledge Registered Posts: 1,954
    payrollpro wrote: »
    Saying that, of course, I don't see that it would be very difficult to record that the person responsible starts by giving instructions and retains responsibility even during the journey. The main problem is that in real life the employee gets a call and simply has to get into the normal place of employment with no real requirement to take charge of the situation from the moment they get the call.

    I believe this is part of what they said, from the call onwards they are taking instruction from the alarm company etc, and it had to be that type of instruction to qualify. It did kick up a fuss at the time when we had to let the caretaker know he would be taxed on pretty much all weekend travel.

    Please let me know what you find out.
  • PGMPGM Font Of All Knowledge Registered Posts: 1,954
    Did you get any further with this payrollpro?
  • DeanDean Experienced Mentor DevonRegistered Posts: 646
    JodieR wrote: »
    A client of mine pays for a taxi to take an employee home most days as he doesn't drive and it's part of his job to take the cash takings home with him every evening - it wouldn't be safe for him to walk home with the cash, especially in the dark. The taxis wouldn't be a taxable benefit would they?

    Ohhh what a nice little 'grey' question that would get examiners excited!

    Here's the perfect solution; treat it as a BiK and arrange a PAYE settlement arrangement with the Revenue for the Employer. The Revenue get their tax and the employee gets home safe with the cash and without being charged income tax.

    Lets just not mention the cost to the employer for doing the PAYE settlement arrangement or add in your time for setting it up....

    If it's literally just to get the employee home then it's quite simply a private expense and the buisness owner gets charged the "expense" to his/hers current account.

    Regards

    Dean
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