The meaning of provided can cause difficulties, often in the
case of holiday accommodation (see
EIM11405). This page, example
EIM11422 and example
EIM11423 use examples with similar basic
facts to bring out the different meaning provided can have
depending on the facts of the case.
A UK company purchases a flat in a French ski resort for
£200,000. It is agreed that a market rental for the property
would be £500 per week during the 6 month skiing season and
£100 per week during the rest of the year. A husband and wife
who are both directors of the company use the flat for holidays
with their children for 3 weeks during the ski season and one week
in the rest of the year. Their children are neither employees nor
directors of the company. The employer advises that the sole reason
the property was bought was as a holiday home for the husband and
wife. It has only been used by them as a holiday home.
We would argue in this case that provided is equivalent to
available for use. Assuming that the flat was habitable for the
whole of the year we would seek a benefit under Part 3 Chapter 5
measured on availability for the whole of the year. The employer
may argue that the husband and wife work full time and that this
prevents them using the flat for more than the 4 weeks in the year
of actual use and so they are effectively only provided with it for
4 weeks. We do not accept that argument.
If the cost of the accommodation exceeds £75,000, then
the amount of the cash equivalent would be calculated in accordance
with Section 106 ITEPA 2003 (see
EIM11472). As the annual value is based
on the open market rental, under ESC A91 the cash equivalent of the
benefit is restricted to step 1 of Section 106. This would mean
that the cash equivalent for the tax year would be £15,600
(£500 x 26 + £100 x 26). Under Section 108 that would be
split between the husband and wife in whatever way was just and
reasonable, presumably half each in this case (see
EIM11472).
