Tax unattended to is a recipe for disaster.  Peter Figg vs Commissioners for HMRC presents a sorry tale of taxpayer woe!

  1. Mr Figg was promised a new job with a tax free removal package offered by his employer as an incentive.
  2. He started his new job and immediately found it did not meet his expectations.  He complained, and after some time agreement was reached that the role was not really what had been promised, so it was agreed he should leave.
  3. He received a tax free lump sum (which was accepted as tax free compensation for loss of office by HMRC) but his employer put the cost of temporary living accommodation (paid in the interim whilst he was working for them) on his P11D.  This was against the original agreement in the job offer.
  4. Mr Figg realised he had to file an online tax return in January (before the 31st deadline) but did not receive the relevant access code from HMRC until after the filing deadline.  Like many people who have sought to represent themselves before courts in the past, Mr Figg found himself on the losing side.
  5. Whilst the courts found that the delay in filing may have been a ‘reasonable excuse’ it held it was not in this particular case, because the taxpayer did not act promptly when HMRC did send him the delayed access code.  Filing actually took place the following January .  No explanation was offered for the continuing delay.  Once the original excuse (no valid access code) ceased to be operative, the taxpayer had an obligation to file without further delay.
  6. The courts also found that, whilst the temporary accommodation expenses could have been tax free if associated with a permanent move of home to get a new job, Mr Figg did not actually move permanently.  He resigned and entered into a compromise agreement without making a permanent move.  Hence the statutory rules for tax free moving expenses were not met.

Like many tax stories ‘the Devil is in the Detail’.  The best course of action is not to leave tax matters unattended to.

A company created two employee benefit trusts for its employees.
After the sale of the parent company for £39 million, cash payments were made to certain employees by the trustees at the end of October 2002, October 2003 and February 2004. These payments were based on the company’s bonus structure and length of service.
HMRC decided that the company should pay primary and secondary class 1 National Insurance contributions on the payments made to the employees. The company appealed this ruling and claimed that the payments were gratuities and should be exempt from National Insurance under Social Security (Contributions) Regulations 2001 Sch 3 para 5.
The First-tier tribunal stated that a gratuity in this situation was a payment given voluntarily in recognition of services rendered and the amount given depended on the donor.
The payments made to the employees were considered individually in order to see if they satisfied the gratuity test.
The company’s appeal was allowed as a result of the payments being gratuities as the trustees were not obliged to make the payments and the amount was at their discretion.