Tom Gardner (BSkyB) (TG)
Norman Green (Logica) (NG)
Shawn Healy (BDO) (SH)
Peter Bickley (ICAEW) (PB)
Elaine Gibson (Institute of Payroll Professionals) (EG)
Ros Hendren (Styles) Northgate Arinso (RS)
Steve Clarke (HSBC) (SC)
Wendy Carey (HMRC)
Bob Lane (Corporate Finance Kent) (BL)
Colin Ben-Nathan (KPMG) (CBN)
Jas Jhooty (PAS UK) (JJ)
Julie Philpotts HMRC (JP)
Trevor Blackmur (Rep for ATT)
Richard Excell (TUC) (RE)
Helen Dearden (Grosvenor Group) (HD)
Barry R Jones (EDS) (BJ)
Matthew Brown (CIOT) (MB)
Mark Groom (Deloitte) (MG)
Eira Jones (Deloitte) (EJ)
Ian Whyteside (Payroll Management) (IW)
Susan Vile (LITRG) (SV)
David McDowell (HMRC)
Guy Westhead (HMRC)
Val Hennelly (HMRC)
Paul Harris (HMRC)
Steve Gentle (HMRC)
Basil Rajamanie (HMRC)
Ann Gardner (HMRC)
The minutes of the last meeting were agreed.
There was some discussion around the requirement for submitting P46 CAR when there is a change of vehicle (as opposed to an increase or decrease in the number of vehicles). HMRC had dropped the requirement for 2010-11. Some members of the forum were asking that the form could still be submitted on an optional basis.
This was not possible for 2010-11 but HMRC would consider it for the future if there was a proven need. They were collecting data currently from several representatives of the group. HMRC asked that this process could be completed quickly so they could analyse and reach a view.
Elaine Gibson asked for clarification of the tax code for employers. For noticeable in year changes of car for example a basic Ford to a Jaguar there would be a very substantial change in tax liability for the benefit. Due to the recession there could be a demand for cheaper and green cars but that in itself could make a considerable difference to the tax due on the benefit. Elaine thought it presumptuous, unless there are statistics to prove this to be the case - to assume that more and more employers will be using green technology cars. There was discussion around car drivers and the tax implications of this and how to reduce liability. Tom Gardner said that with the increase in green technology people would be moving away from expensive cars to green efficient cars which in theory cost less to run. More importance would be placed on cheaper cars.
David McDowell (DMcD) referred to comments at previous meetings, particularly the meeting held in April 2008, and advised that HMRC was now able to respond finally to representations seeking to extend to Cycle to Work does this mean Cycle to Work Schemes – salary sacrifice arrangements the view it had taken that the 'available to all' condition for Childcare Vouchers could be relaxed where it conflicted with NMW considerations.
DMcD advised that the Government had decided to change retrospectively in law the 'available to all' condition for tax exempt CCVs so that it will not conflict with NMW law. This relaxation will apply only to exempt CCVs in relation to NMW considerations. This relaxation will not apply to CCVs for other considerations, or to other benefits with a similar condition for any consideration.
Representatives expressed concern that enforcing the 'available to all' condition with existing C2W schemes will cause employers to unwind salary sacrifice for C2W schemes because they will not be able to offer C2W in an economical manner that complies with the 'available to all' condition of the exemption. DMcD said that HMRC were aware that employers were concerned about this but emphasised that the availability condition in the cycles exemption simply requires that the offer of a loaned cycle is genuinely open to all employees: it does not require all employees to be provided with a cycle or offered a cycle through salary sacrifice arrangements.
DMcD said that he was aware that the condition was currently being enforced by HMRC and that some scheme providers/employers were being advised that their arrangements were such that they would not attract tax exempt treatment because they did not comply with the 'available to all' condition for NMW and other reasons.
Regarding the future of the C2W exemption, DMcD said HMRC would issue expanded guidance later this autumn. DMcD added that this expanded guidance would make the situation in relation to the 'available to all' condition crystal clear, and would also cover retrospection where existing schemes were thought to be non-compliant with respect to 'available to all' condition.
There was some discussion around examples of support bus services and also around TfL Oyster Card which was introduced in 2003. For employee travel Anne Davies would follow up to make sure rules were crystal clear on the rules for employees.
Guy Westhead said HMRC were continuing to monitor salary sacrifice on behalf of Ministers, in particular exchequer cost, and Ministers were taking an interest in the issue.
Steve Clarke asked for this item to be included on the agenda because one of his members told him that their Employee Assistance (EAP) service provider has refused to take a phone call from an employee’s spouse on the grounds that it would breach the exemption. Steve said that he wanted clarification on when an employee’s dependant can use the EAP service provided by their employer. Paul Harris explained that EAP’s are not exempt from a tax charge as such but rely on the Welfare Counselling regulations which only exempts from tax the provision of part of the EAP usually provided (Legal and Financial advice is not covered) and only covers employees so if an employee’s dependant uses an EAP service the employee is likely to incur a tax charge. The only exception is where the dependent is involved in couple counselling in order to resolve a problem in respect of the employee. He went on to say that the question of tax treatment of EAP services had been discussed with the Employee Assistance Professional Association and following these discussions HMRC extended their guidance at EIM 21845 and includes where such services are provided to dependants, this part has been copied below. Paul said that HMRC had been approached by someone else on this matter and was looking at this part of the guidance again if it was thought that it needed to be amended to make HMRC’s position clearer then we will consider doing so and advise members of the group accordingly.
HMRC has seen some EAPs which provide welfare counselling to dependants and-or family or household members of employees. The exemption does not extend beyond the employee concerned. Consequently any EAP which is made directly available to dependants and others, as well as to employees, does not satisfy the terms of the exemption.
However, in recognition of the fact that employees may sometimes be affected by family and relationship difficulties, limited services can be provided to an employee’s dependents by employee assistance services and still remain within the welfare counselling exemption provided the guidelines below are followed:
The second item was covered by Any Other Business and concerned the tax treatment employer provided accommodation for caretakers.
Paul Harris introduced this item in order to inform the meeting that HMRC had been asked about the tax position for caretakers and whether they were still covered by the exemption at s99(1). He went on to advise that the position is much the same as for wardens of sheltered accommodation and working time directive and national minimum wage issues have made it more common for employers of caretakers to require their employees not to be on call.
Where this is the case, the exception in s99(1) will not apply for the same reasons as for those wardens of sheltered housing schemes who do not have an on call requirement. The guidance at EIM113423 lists a number of generic job titles where HMRC accepts that exception from the living accommodation benefit charge can be given under s99(1) ITEPA 2003 that is that it is necessary for the proper performance of the duties for the employee to live in the accommodation provided. But the recent changes to the contractual terms under which wardens are employed brought about by the Working Time Directive (WTD) have in many cases removed or curtailed the requirement for wardens to be on call outside normal working hours. In the light of these changes, HMRC reviewed its guidance to clarify the circumstances in which wardens would continue to qualify automatically for this particular exception and will do so again in respect of caretakers. It should be borne in mind that the amended guidance envisages that the particular facts of an individual case may allow wardens to continue to qualify for the exception.
HMRC has previously accepted that caretakers living on the premises with a genuine full time caretaking job satisfy the conditions for the exception in s99(1) without explicitly stating that they must be on call outside normal working hours. It now appears that the existing guidance needs to be clarified to reflect the possibility that recent changes to employment law and practice have removed the requirement for certain caretakers living on the premises to be treated in the same way as wardens of sheltered housing scheme and unless they are required to be on call, they are unlikely to be covered by the exemptions at s99(1) and s99(2). HMRC accepts that this will be regarded as a change to its published view and as such will not seek to apply it to tax years before 2009-10. Paul confirmed that where an employer thought that an employee would continue to be covered by the exemption at s99(1) HMRC would consider the case on the facts available.
There was a brief discussion on the requirement to submit P11Ds where the benefit had already been put through the payroll. HMRC confirmed that there is a legal requirement to send in P11Ds even where the benefits had been payrolled. HMRC added that from last year they have been asking all employers who payroll benefits to send in P11Ds or lists which are clearly marked that the benefits had been payrolled. HMRC acknowledged that these lists could not be sent in electronically but agreed to think about whether these could be sent by email. HMRC also confirmed that they would circulate some guidance for submission of P11Ds/P11D lists that are due in July 2010.
The next meeting will be held on Thursday 17 December 2009 in the William Chambers Room Somerset House.
