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Interesting omission from latest Agent Update

Often a near copy of Employers Bulletin, Agent Update 85 is missing article from previous week's EB

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HMRC Employer Bulletin 90 for June 2021 contained the following article (missing from Agent Update):

Taxable benefit charge - returning office equipment
Employer provided equipment

If you have supplied your employees with office equipment to allow them to work from home, without a transfer of ownership, there is no tax charge when they return the equipment back to you.  If you transfer the ownership of the equipment to the employee at any stage of their employment, a benefit charge generally arises on the market value of the equipment at the time of the transfer less any amount made good by the employee.

Employer reimbursed equipment
If your employee has agreed to purchase their own home office equipment for use whilst working at home as a result of coronavirus and you reimburse the exact expense, unless you have specified to your employee that they must transfer ownership to you, the ownership of the equipment rests with your employee.

There is no benefit charge on the reimbursement.  There is also no benefit charge if you allow your employee to keep the equipment as it is something that they already own.

 

It's that last para (first sentence in it) that stuns me.

According to "the people who know these things" it is a temporary dispensation for last & current tax years - as part of supporting employers during the pandemic - so may be withdrawn at short notice.  But, in the meantime, it provides a wonderful opportunity for small businesses trying to encourage a more permanent WFH culture - without employees bearing any tax burden IF the purchasing of equipment is done the right way round.

Replies (16)

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ALISK
By atleastisoundknowledgable...
20th Jun 2021 09:38

Mental. I read it and assumed it was a typo. Before I kit out half my house, are we sure that it’s not a mistake?

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Replying to atleastisoundknowledgable...:
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By Tax Dragon
20th Jun 2021 10:51

You're an agent, right? So it doesn't apply to you - that was Hugo's interesting point.

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Replying to Tax Dragon:
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By Hugo Fair
20th Jun 2021 11:01

Ta.
I hate to join the "HMRC don't treat Agents nicely" bandwagon, but historically the content of both bulletins was virtually identical (apart from a bit of suitable re-wording).
This time there are major differences (many because they only apply to Agents) ... so is this particular omission deliberate or accidental?

[And there is also the illogicality/newsworthiness of what the article says].

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Replying to Hugo Fair:
ALISK
By atleastisoundknowledgable...
20th Jun 2021 12:48

I assume it wasn’t on the AU as HMRC don’t want us telling all our clients about it?!

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Replying to atleastisoundknowledgable...:
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By Tax Dragon
20th Jun 2021 15:40

I was joining in with the common AA thinking that tax is a matter of opinion, circumstantial evidence, quoting one line of guidance and making up (so much better than reading) the rest and general (mis)interpretation. I've decided it's time Dragon became a 'proper' Awebber. (More practice needed?)

So, clearly, the fact that it's not in the agent update must be because it doesn't apply to agents.

(If you prefer an Old Dragon answer - a serious answer, based on law - see MUL.)

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Replying to atleastisoundknowledgable...:
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By Hugo Fair
20th Jun 2021 10:57

Depends on the degree of absolutely certainty that you require (as with so much HMRC guidance)!

There's nothing surprising (to me) until you encounter the short, sweet sentence in the final para: "There is no benefit charge on the reimbursement."
But I've read and re-read the article several times and can't see any room for a simple typo (such as an extraneous 'no') - especially as the next sentence commences with " There is ALSO (my caps) no benefit charge .."

When I raised it in a meeting last week with various industry 'gurus', I was pointed at the throwaway reference to ".. whilst working at home as a result of coronavirus .." and was told that this had been known (to whom?) as a temporary measure since April 2020 and had not yet been withdrawn.
Hence this posting.

Of course if anyone knows better or can point us at something that confirms or denies the policy ... ?

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Replying to Hugo Fair:
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By More unearned luck
20th Jun 2021 14:59

SI 2020/524.
The reimbursement must be between 11/6/20 and 5/4/22.

To the extent that the article doesn't include the provisos that the equipment must have been purchased for the sole use of working at home during the pandemic and have no significant private use, there seems to be an ESC.

Interesting that 'sole' is used in the Regs and s316 and not W&E. Is there a difference?

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Replying to More unearned luck:
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By More unearned luck
20th Jun 2021 15:42

What stuns me is the idea that if you are going to the newsagent and I ask you to bring me back a bag of crisps and I reimburse you on your return that I only own the crisps if we have explicitly agreed that ownership is transferred to me. I'd have thought the acts of seeking and making reimbursement implies that ownership is transferred, but IANAL.

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Replying to More unearned luck:
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By Hugo Fair
20th Jun 2021 15:47

Thanks for the reference ... nice and brief at https://www.legislation.gov.uk/uksi/2020/524/made

I like to think (the eternal optimist in me) that the wording is deliberate ... in that W&E usually refers to 'use', whereas the SI's 'sole' is in the context of the reason that the equipment was obtained (which doesn't in itself preclude some other uses subsequently).

So whereas W&E puts an enduring condition on usage, the SI only applies the condition at the point when the equipment was 'obtained' (whether that is purchased, delivered, installed or reimbursed could be a separate discussion).

In the circumstances this is an understandable approach - since it would be invidious to try preventing, say, a single page being scanned for private purposes when (under lockdown) the person had no other options.

EDIT: I've now also found the news of the extended duration ... at https://www.gov.uk/government/publications/extension-to-the-temporary-in...

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Replying to Hugo Fair:
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By More unearned luck
20th Jun 2021 16:45

Nice try, but I'm not convinced.

Miss Mallalieu was denied relief for work wear on W&E grounds because, at the time of purchase, she had a subconscious private motive, ie the subsequent use was assessed at the time the clothes were 'obtained'. The sole test is also susceptible to an assessment at that time.

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Replying to More unearned luck:
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By Tax Dragon
20th Jun 2021 17:13

Either way, the alleged 'opportunity' can be seen as such only if there's a more-than-subconscious motive (and ALISK's excitement is, predictably, premature).

(Though are you and Hugo wandering away from employee rules? Doesn't the rest of the HMRC guidance focus on necessity rather than wholeness and exclusiveness? That would make more sense. And the serious comment that Awebber Dragon didn't make was that it's unlikely that something has suddenly become a necessity now. So it's hard to see how much new expenditure could come within these rules. Maybe ALISK's excitement is actually [and ironically] too late... should have done the house fit 15 months ago.)

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Replying to Tax Dragon:
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By Hugo Fair
20th Jun 2021 17:53

I follow your logic ... but the SI doesn't refer to 'necessity', the wording being:

(2) For the purposes of paragraph (1) “coronavirus related home office expenses” means expenses incurred by an employee in respect of equipment where—
(a) that equipment was obtained for the sole purpose of enabling the employee to work from home as a result of the coronavirus outbreak; and
(b) the provision of the equipment would have been exempt from income tax under section 316 of ITEPA if it had been provided directly to the employee by or on behalf of the employer.

So the conditions being applied are "obtained for the sole purpose of enabling the employee to work from home" AND "as a result of the coronavirus outbreak".

As usual that 2nd condition is sufficiently open to interpretation as to excite the hopes of ALISK (and others). It would certainly have been more obvious that the result arose 12-15 months ago, but I can imagine other scenarios - such as an employer (whose staff have been fully furloughed because they can't work from home) losing patience and belatedly deciding to refocus business so that staff can work from home in the future - where the result is only being realised now.

But, back to the first condition ... "obtained for the sole purpose of enabling the employee to work from home" ... in the same way that 'sole' doesn't seem to me to be same as W&E, nor does 'enabling' directly equate to necessity.
Strictly speaking, enable does mean to make something possible - but it doesn't always mean via the only possible means (which would make it a necessity), so 'enabled' may simply involve a more efficient or tolerable modus operandi?

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Replying to Hugo Fair:
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By Tax Dragon
20th Jun 2021 23:18

So what you're saying is that serious Dragon is wrong (nothing new there) - but principally with new employees or in cases where the employee has been furloughed. As I doubt many agents were furloughed, it doesn't apply to them so new-style Awebber Dragon was right.

Hm. I'll have to play off the cuff more often!

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By Tax Dragon
21st Jun 2021 06:52

Now that my new personality is publically exposed*, but probably immediately obvious only to me (the need for more practice having been confirmed), maybe, until the practice has been put in, I need to start signing comments off, so it's clear to you all?

If so, I need some new (two-letter, for obvious reasons**) acronyms. I'll take an Aweb yes/no vote on these:

SD = Serious Old Dragon
GD = Going Offlimit***, Newstyle, 'Awebber' Dragon.

(I may add others - eg for when I'm trying to be funny.)

*Hey I'm a PEP. Better put myself on the high risk register.

**Brevity

***Not sure whether it's off limits, off topic, off on one or... maybe just talking bollucks.

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Replying to Tax Dragon:
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By Hugo Fair
21st Jun 2021 12:17

Not sure that I can cope with a multi-faceted dragon ... but maybe it's more all the TLAs that sometimes seem to consume more brain cells than the technical queries being raised. [And yes, a TLA can contain two words not just three].
I consider myself less of a PEP, more of a PERP ... Perennially Extra Recalcitrant Person (not the US cop vernacular variety) ... and suspect you're more of a SYD than a SOD (sorry SD).
As for limits, you can only be 'off limit' if you recognise the existence of them in the first place - whereas I tend to regard them as transparent constructs created by others, and so irrelevant (whilst trying not to cause offence along the way)!

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Northumberland flag
By MJShone
21st Jun 2021 07:23

It's been around for a while: https://www.gov.uk/guidance/check-which-expenses-are-taxable-if-your-emp...
Originally to 5 April 2021, then extended to 5 April 2022. HMRC commentary says the employer must have reimbursed the exact expense - that's not quite what the legislation says - I think reimbursement in part is possibly OK. It talks about "amounts reimbursed".

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