Perhaps the most significant recent development in the world of employment taxes is the recent draft guidance published by HMRC in respect of late night taxis. If you were still under the impression that the Government’s objectives for tax simplification were being taken very seriously, then think again.
Section 248(1) of ITEPA 2003 states that;
“No liability to income tax arises in respect of the provision of transport or the payment or reimbursement of expenses incurred on transport if
(a) the transport is for a journey from the employee’s workplace to the employee’s home,
(b) the late working conditions or the car-sharing failure conditions are met, and
(c) the number of previous occasions in the tax year on which the provision of transport within this section has occurred is lower than 60”
One would think that this is a fairly straightforward section to interpret. However, the draft guidance on how this Section is to be applied runs to five pages!
In summary, HMRC have stated that employers must “be able to show that the three late night working conditions set out in the legislation are satisfied in all cases”, and that “a record of an internal authorisation procedure that shows that the qualifying conditions have been considered and applied”. Clearly the intention is to place an onerous and perhaps unnecessary burden on employers who provide such benefits.
The late night working conditions are as follows;
1) the employee is required to work later than usual and until at least 9pm;
2) this occurs irregularly; and
3) by the time the employee ceases work;
a. either public transport has ceased, or
b. it would not be reasonable to expect the employee to use public transport.
Each of these conditions has its own explanation within the guidance, often with further conditions to be met and examples to demonstrate its application in practice. Clearly we are unable to reproduce all those here, but for further information please refer to HMRC website, or give us a call to discuss.
This page was last updated on Friday, January 04, 2008.
