Are medical costs allowable?

Industrial injury to director, necessitating an operation not readily available under NHS.

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I have a client who runs a coachworks company with only himself and another carrying out the operational work.   He sustained an injury to his shoulder while working (complete rupture of supraspinatus and retraction to acromioclavicular joint) which prevents him carrying out much of his work.  The wait for an NHS operation is very long and he needs to get it repaired privately as the company is losing income while he is unable to perform his work fully.

I have advised him to claim Industrial Injuries benefits, and that the company should pay the costs of the operation and subsequent necessary physiotherapy.  However, I have two questions:

1.Would the costs be allowable for Corporation Tax purposes, but treated as a taxable benefit and subject to Class 1A NICs?

2. OR in the circumstances that it is an industrial injury, would they be wholly allowable and not subject to Class 1A Nic or taxable as a benefit?

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By David Ex
19th Apr 2022 19:38

Have you searched the site? Another very common question including one last week.

https://www.google.co.uk/search?q=site%3A+accountingweb.co.uk+medical+costs

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By Jack the Lad
19th Apr 2022 19:53

Thanks David. I searched AccWeb and HMRC but could not find any of them!

There is still some doubt reading through all the answers and other items which came up, but on balance it looks like the costs would be allowable for CT and not taxable as a benefit or therefore subject to Class 1A NIC.

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By Hugo Fair
19th Apr 2022 20:41

Not clear whether your client is solely the injured party or also the employer company - who may have insurance in place? I know it's a long shot, but worth checking.

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Replying to Hugo Fair:
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By Jack the Lad
20th Apr 2022 13:42

Thanks Hugo
He is the 60% majority shareholder in the company, his partner holding the other 40%, They both run the company, he the operations, she the administration and occasional "hoppo".
We are looking into the question of a claim against the company EL Insurance policy.

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By The Dullard
19th Apr 2022 21:38

If somebody has suffered injury during the course of their employment, it seems perfectly reasonable to me for them to take action against their employer to compensation and to recover the costs of rectifying the injury.

Any employer faced with such a claim might reasonably settle out of court and the costs of such settlement would be incurred wholly and exclusively for the purposes of their business.

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