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Failed benefit in kind

Failed benefit in kind

A company paid for a benefit for a higher paid employee.

The supplier went out of business before the employee received the benefit. The employer never recovered the cost.

Is the employee taxed on the expenditure if no benefit was received by him?
Charles Stringer


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By Anonymous
17th Jun 2003 15:16

What happened in fact?
Was this say the purchase of a holiday or time share, or attendance at a sporting venue, where the supplier failed?

If the employee did not in the end enjoy anything as a consequence of his employer's abortive expenditure, it is difficult to see what benefit he received[unless the hope of attending Wimbledon with an invalid voucher, say, has a value].

It is more interesting to ask whether the expenditure is allowable for tax to the employer. I am of the view that the intentention was wholly and exclusively for the purposes of the business[to promote employee goodwill], and there is no good reason why it should not be allowable.

There is , however, a counter argument if the expense was say in relation to attendance at a sporting event. The Revenue could then argue that the expense would be disallowable under ICTA s.577[3][Business Entertaining expenses].

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