The First-Tier Tribunal has recently heard the case J Flanagan v HMRC (TC02161).

An employee of RBS plc took out a mortgage with his employer.  The terms of the mortgage were better than those available to normal RBS customers.

HMRC assessed Mr Flanagan with tax on a benefit in kind through the provision of a “Cheap Loan” by his employer (ITEPA s175), because the rate of interest was lower than the official rate determined by HMRC.

Mr Flanagan appealed on the basis that there were mortgages available in the open market with a lower interest rate than the official rate.

In upholding HMRC’s assessment the Judge had sympathy for the appellant but stated that under the rules tax was technically and correctly due.

Bank employees beware!