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BIK on PMI for rugby players

Have a professional rugby club as a client who offers private medical insurance

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Hi,

One of my clients offers Private Medical Insurance to players in their professional sportsteam.  They have been told that premiums are always subject to BIK tax. Now there are a couple of issues that I have with this. The first is HMRC’s own reference to duality of purpose. The vast majority of claims relate to injuries sustained during playing or training so the marginal beenfit to the player is effectively zero and there is a particular case quoted relating to a stunt man that allows medical expenses as tax deductible. There are no insurances on the market that will cover sport injuries only so the personal benefit to the player is truly unavoidable and incidental.

Does anyone have any experience of this issue?

 

KFK

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26th Nov 2018 22:37

Yep. They're benefits in kind.

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26th Nov 2018 23:17

I know it’s the standard answer but:

With the above in mind, our view is that expenditure that would normally be considered to have an intrinsic duality of purpose, be it medical including physiotherapy, nutritional or sports training, may be deductible in the case of professional athletes where:

it is far removed from their ordinary needs as human beings,
it is of a special character dictated by their occupation as a matter of physical necessity, and
any private benefit is an unavoidable effect of the expenditure.

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to KungFuKipper
27th Nov 2018 01:05

KungFuKipper wrote:

I know it’s the standard answer but:

Yep. They're benefits in kind.

I don't understand how an insurer would insure professional rugby players for sporting injuries. Presumably the premiums are absolutely eye-watering.

Would the client be any worse off if they self insured for sporting injuries? Pay for treatment for sports injuries and no BIK.

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27th Nov 2018 15:55

I was quite surprised with the insurance existing at all, I would agree. I also get that PMI is a BIK in every other instance I have ever come across - surely the wording in the HMRC quote above is enough for at least an appeal though?:

1. it is far removed from their ordinary needs as human beings,
YES -how many people need frequent scans and other specialist sporting treatment? (weakest of the arguments)

2. it is of a special character dictated by their occupation as a matter of physical necessity, and
YES - no doubt

3. any private benefit is an unavoidable effect of the expenditure
YES - there are no alternative insurances available that does not cover the players personally. They will even sign a waiver to not claim in the event of personal injuries

I know I am labouring the point, for which apologies - it just seems illogical (used to that) and is causing the club major issues with their players.

Thanks for hanging in there with me though lion

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to KungFuKipper
27th Nov 2018 16:15

KungFuKipper wrote:
<

Thanks for hanging in there with me though lion

Well, I have a personal interest.

I'm aware of a couple of cases which have gone with the taxpayer but they were extreme and you'll probably need to go to FTT to argue your point on the facts of your own case.

You're probably better paying as you go for the medical stuff in the long term but any costs for operations or other procedures will still be taxed on the employee as a BIK.

Your best route is to argue that it's an industrial accident.

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to KungFuKipper
27th Nov 2018 16:57

KungFuKipper wrote:

causing the club major issues with their players.

What do other clubs do? Has the league/association lobbied for a change in policy with HMRC?
If everyone is in the same boat then the players have nothing to complain about. If your club has tried to follow its own rules and is now feeling exposed, then it will have to take the consequences and either increase its players pay or pay for treatment directly for any sporting injuries (possibly?)

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to WhichTyler
27th Nov 2018 17:13

There old accountant just ignored the issue/P11D until they got found out. I guess I'm seeking to clarify the position properly and saw enough daylight to think it might be worth a go. I'm going to start with a letter to the inspector and then decide on FTT afterwards . There is such a lot of received wisdom on this and no-one I know in a technical capacity who has challenged it.

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27th Nov 2018 16:23

Madness isn't it?

Just because it is always done this way, the answer back will almost certainly be 'its a BIK' regardless of the strength of the argument. I'm stubborn though, so I'm having the argument!

Are you interested in the outcome?

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to KungFuKipper
27th Nov 2018 16:44

I'm always interested in outcomes.

You won't win this with the Inspector - unless it's trivial. You'll need to go to FTT.

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to lionofludesch
27th Nov 2018 16:55

(maybe not FTT stubborn - life's too short!)

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to KungFuKipper
27th Nov 2018 17:53

As are the client's pockets, presumably.

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27th Nov 2018 18:35

Out of interest, doesn't a professional rugby club have its own physios, nutritionist and access to medical facilities?

Seems odd to have each player's choice of doctor deciding on treatment...

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By ChrisKH
28th Nov 2018 09:57

I think others have covered the BIK angle. Pay as you go, has to be more tax effective in that respect.

The alternative, if you want to show the players you are serious about their health and well being, is to negotiate with HMRC to get the PMI onto the PAYE Settlement agreement and meet the benefit cost up front. Yes, it's expensive but aren't they worth it?

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