SE05040 - Emoluments of employees and office holders: retraining expenses - withdrawal of exemption - power to make assessments

Section 588(5) ICTA 1988

If an Inspector learns that one of the three withdrawal events listed in SE05030 has occurred, he or she may take the action necessary to withdraw the exemption and to charge any tax which becomes due as a result of that withdrawal. The Inspector may

• require the employee to complete a self-assessment return, or
• open an enquiry into a return that has already been made (if the enquiry time limit has not expired), or
• if a self-assessment has already become final, the Inspector may make a further assessment under Section 29 TMA 1970. The time limit for making the further assessment is six years from the end of the year of assessment in which the withdrawal event occurred.

Liability may arise on the employee as follows:

• under Section 19(1)1 ICTA 1988 in respect of amounts reimbursed by the employer, or paid to discharge a debt of the employee (see SE00580)
• under Sections 141 and 142 ICTA 1988 if vouchers or credit tokens were used in connection with the course (see SE16140)
• (if Section 19(1)1 does not apply) under Sections 153 and 154 ICTA 1988 in respect of directors and employees within Part V Chapter II ICTA 1988 (see SE20001 onwards).

Note that the power to make assessments, described above, does not replace the Revenue’s normal power to recover PAYE tax from the employer if the conditions for obtaining exemption were not satisfied at the time when the payments were made. Examples of this would be where part of the course was recreational, or part was to be held outside the United Kingdom. The guidance at EP3342-3344, EP3398 AND EP3420-3424 applies.