Benefits-in-kind for self-employed bookkeeper

Benefits-in-kind for self-employed bookkeeper

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A business employs a self-employed bookkepper to maintain their accounting records. The bookkeeper attends the staff Xmas party and also receives free dental treatment, provided by the business as it is a dental surgery.

How should these transactions be treated in the employer's tax computations and are there any tax inplications for the bookkeeper?
Nick Stewart

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By DMGbus
16th May 2005 08:51

"Part & parcel of the organisation" - Employment status ?
Receiving employee-like benefits in kind and atttending the staff Christmas party rather does look like the bookkeeper is "part and parcel of the organisation" and therefore at risk of being treated as an employee.
The costs of the Christmas party attendance will be allowable if the bookkeeper were an employee but disallowable as entertaining if the bookkeeper is NOT an employee, but rather a supplier.

The Benefit in Kind provided seems to me to be the most dangerous part of the arrangements. Does rather make the bookkeeper look like an employee. If an employee allowable, then BIK & Class 1A NIC payable. If not an employee, then it looks like some some sort of gift to a supplier and doesn't appear to fall within the generally recognised add-back exemptions for gifts to suppiers / customers. Maybe the worst of both worlds here - disallowable in provider's accounts as a supplier gift but factually a form of income in the bookkeeper's hands ? There could be VAT implications for the bookkeeper if the bookkeeper were VAT registered - "non monetary consideration" comes to mind.

To sum up, the stated arrangements are in my opinion NOT RECOMMENDED.

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