My client is a luxury goods manufacturer (high end very expensive jewellery etc).
Some of the items are obsolete, damanged and are sold to staff at less than cost value. On other ocassions staff will receive gifts (e.g. as a long service award) or be able to purchase goods using a staff discount (so paying more than cost price but less than RRP).
HMRC are arguing the cost of the goods should be in accordance with either s62 or s206 ITEPA 2003, on the basis the luxury goods can be exchanged for money or money's worth quite easily and/or that the market value should be used which is more than what the individuals will have paid (if payment was made by them).
I have pointed HMRC to EIM21110 and the rules surrounding inhouse benefits and the fact the intangible value associated with the physical items provided by my client should be ignored - it should be the marginal cost basis (advertising, branding etc would still be a cost regardless of how many units my client produced).
HMRC are arguing that s206 and s62 ITEPA override s203/s204 and are not budging. Furthermore they have said that in order to not be a readily convertible asset that my client needs to demonstrate goods are not resold and how they monitor this. Each employee has a contract which strictly prohibits them from selling any items - they are intended for personal use only.
There will be specialist sites on which the goods can be sold but they are so high in value that they are unlikely to be readily sold due to the price point. It also then in my mind invalidates the provision of any inhouse benefit being based on marginal cost as you have the likes of eBay and Amazon where you can list anything you want to then resell.
Any thoughts would be welcomed.