The benefits code is being used here
only in order to find the cash equivalent of the
benefit for the purposes of Section 401 ITEPA 2003. None of the
other rules in the benefits code are relevant and should not be
applied. For example,
EIM11341 gives guidance about an
exception from the living accommodation charge where an employee
shows that residence in the accommodation is necessary for the
proper performance of the duties of an employment. That provision
has nothing to do with calculating the cash equivalent and so is
not applied for the purposes of Section 401. Whether a person is
chargeable under Section 401 ITEPA 2003 depends only on the rules
concerning the scope of Section 401 itself (see
EIM13000).
Subject to that, and with
one difference, the cash equivalent of the benefit
of living accommodation for the purposes of Section 401 ITEPA 2003
is arrived at in the same way as in the benefits code (see
EIM11401 and associated guidance).
The
difference applies where the cost of the
accommodation exceeds £75,000 (see EIM11475)
and the sum made good by the employee or
ex-employee is greater than the rental value (see
EIM11431 first bullet). In such a case,
the subtraction in step 4 in
EIM11480 is that excess.
