EIM30052 - Dispensations: general (continued)

Section 65 ITEPA 2003

Before the Officer of HMRC can issue a dispensation the person paying the expenses or providing the benefit has to say what the circumstances are in which payments of a particular sort are made or what benefits are being provided. If there is reason to do so the Officer can cancel a dispensation at any time.

Dispensations can also be given in respect of the provision of vouchers and credit tokens for employees in an excluded employment (see EIM20007), for which there are specific rules in relation to dispensations in Section 96 ITEPA - see EIM16180. The benefit of provided living accommodation cannot be included in a dispensation because this benefit is not one of the “listed provisions” (s65(2)) to which a dispensation can apply and, unlike vouchers or credit tokens, there are no specific rules to apply a dispensation to living accommodation.

Where a dispensation has been given by the Officer:

• the employer need not report the particular expenses or benefits covered by it on form P11D and
• the employee need not include them on his income tax returns and
• they are not included in assessments or the PAYE coding of the employee.

No retrospection beyond the year of application

If the conditions for granting a dispensation are satisfied ( EIM30055), the dispensation strictly takes effect from the date of the notice issued by HMRC, although it may be agreed that it can take effect from the beginning of the tax year to which the dispensation relates. A dispensation cannot apply with retrospective effect to an earlier year.

For example, if an application for a dispensation was submitted in August 2004, and the dispensation was granted in December 2004, it may be agreed that the dispensation can apply with retrospective effect from 6 April 2004, as this was the start of the year in which the application was submitted. On the other hand, if an application was submitted in February 2004 and granted in June 2004, it may be agreed that the dispensation can apply with retrospective effect from 6 April 2003, as the application was submitted in 2003/04.

(This text has been withheld because of exemptions in the Freedom of Information Act 2000)