HMRC clamps down on late night taxi exemption
In this issue:
• HMRC clamps down on
late night taxi exemption
• National Minimum Wage
– the watchdog bites!
Simplifying ‘nil payment’
‘An inspector calls’
• Approaching deadlines
HM Revenue & Customs (HMRC) has issued draft guidance which indicates that it
intends to tighten up on its interpretation of the legislation covering late night travel
by employees. Currently, when an employer pays for an employee’s taxi journey home
after late working, Section 248 of ITEPA 2003 provides an exemption from the benefit
in kind charge that would otherwise arise. Four conditions have to be met:
this happens on not more than 60 occasions in any tax year
the employee is asked to work later than usual and after 9pm
there is no regular pattern to the late working
by the time the employee ceases working, either public transport has ceased or it
would be unreasonable to expect the employee to use public transport.
Not all aspects of HMRC policy in this area are new. It was already known, for
example, that the ‘60 occasions’ rule is not intended to be an allowance – if the limit is
exceeded, all the journeys become taxable, not simply the 61st and subsequent
journeys. Similarly the ‘later than usual’ rule prevents workers such as restaurant and
bar staff from benefiting, because they work in an industry where working after 9pm is
However, the new guidance reinterprets ‘later than usual’ to show that HMRC will also
take account of established work patterns. So, for example, a worker who is contracted
to work till 8pm but frequently works till 10pm or later will be denied the exemption
because of his working pattern, even though his employer provides a taxi fewer than
60 times in the year.
More alarming is HMRC’s clamp down on what they will accept as ‘unreasonable’ for
the purpose of condition four. They do not accept that the exemption should apply
simply because the employee:
has to travel home in the dark
is tired after a long day at the office
has to carry a heavy briefcase home
would otherwise have to travel to an unmanned station.
They are also unimpressed by appeals to the reduced service frequency in the evening.
According to HMRC it is up to the employee to study the timetables and make plans
accordingly! (Perhaps it hasn’t occurred to them that not all late night working is
planned in advance.) However, they are prepared to apply the exemption if an
evening journey is likely to take ‘significantly longer’ than at other times, but they
define ‘significantly longer’ as meaning at least 60 minutes. Employers will be relieved
to know that the guidance does allow for the exemption to apply where there are
issues of the employee’s personal safety. Yet even here, there is a strong hint that the
exemption will not be automatic. To quote the guidance verbatim:
‘.. the circumstances of the case must demonstrate a significant difference from the normal
situation where people continue to use public transport after 9pm.’
Given HMRC’s increasingly rigid approach in this area, employers may be tempted to
consider putting the employee up in a nearby hotel overnight. If they do, there will be
a taxable benefit. The Section 248 exemption applies only to transport.
National Minimum Wage – the watchdog bites!
On 28 August 2007, HMRC reported the first criminal prosecution under the
NMW legislation. The proprietor of a children’s nursery in Walthamstow, London E17,
was fined £2,500 plus £500 costs for ‘obstruction’ – refusing to allow HMRC
compliance officers access to staff records. There are six potential criminal offences
under the 1998 legislation:
refusing or wilfully neglecting to pay the NMW
failing to keep or preserve the necessary records
knowingly causing or allowing a false entry in records
furnishing false records or information
delaying or obstructing compliance officers
refusing to answer questions or produce documents for compliance officers.
Each offence carries a maximum fine of £5,000 plus a criminal record.
For further information:
If you would like any further
information on the contents of
this newsletter or any other
employment related issues,
contact David Daly, Brian
Robson or a member of our
Employers’ Advisory Group in
our London office:
Horwath Clark Whitehill LLP
St Bride’s House
10 Salisbury Square
Tel: 020 7842 7100
Fax: 020 7583 1720
Simplifying ‘nil payment’ notifications
HMRC has added a new ‘nil payment’ feature to its website. It is now possible to notify
HMRC via the internet when no PAYE or NIC remittance is due for a particular tax
month and save yourself from being bombarded with payment reminders. Just go to
the web page below and fill in the online form:
You will need to have your Accounts Office reference handy. This is a 13-character
reference that you can find on the front of your payslip booklet, e.g. 951PQ00123456.
Alternatively, you can use the telephone service on 0845 366 7816.
‘An inspector calls’
A further reminder that we are offering you the chance to attend one of two half-day
training workshops on how to handle a PAYE inspection by HMRC. These will be held
in our London office on:
Wednesday 17 October 2007 (primarily for the not-for-profit sector)
Wednesday 21 November 2007 (primarily for the commercial sector).
The cost per delegate will be £158.63 (£135 plus VAT), which includes copies of all
slides and handouts, plus a hot buffet lunch. For more details contact Judy Vincent:
firstname.lastname@example.org or call 020 7842 7319.
Friday 19 October
Deadline for payment of PAYE deductions, National Insurance
Contributions, student loan deductions and subcontractor
deductions for Month 6 (unless paying electronically)
Friday 19 October
Deadline for submitting paper versions of monthly CIS300
subcontractor returns for Month 6
Monday 22 October Deadline for electronic payments of Month 6 deductions
Monday 22 October Deadline for electronic submission of CIS300 return for
This information is published without responsibility on our part for loss occasioned to any person acting or refraining from
acting as a result of any information published herein. © Horwath Clark Whitehill LLP September 2007.