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Is the cost of director studying tax relievable

Is the cost of director studying tax relievable

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Our client is a consultancy with a director and half a dozen consulatants who provide advice to Higher Education providers worldwide on learning solutions specific to the development and application of academic knowledge. The company has been trading in this guise for 15+ years.

The managing director is going to undertake a PhD course writing publications on the sustainability of professional sport. He is arguing that obtaining a PhD will enhance his role as an academic expert which will be beneficial to the company when prospecting amongst FE establishments.

I feel that the link to the company's trade is too tenuous and as such if the company claims relief on the cost of the course £2kpa it will be a benefit in kind for the director

15 years ago when we had a local tax office I had a similar query for a medical herbalist who wanted to study oeseopathy, I wrote to HMRC and they gave their consent that the expense was relievable. Is it still possible to get HMRC's view on matters such as this?

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By Duggimon
26th Aug 2021 10:24

Do you think that the training is not related to the director's work? There's no wholly, exclusively or necessarily test here, work related training is allowable and exempt from BIK.

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A Putey FACA
By Arthur Putey
26th Aug 2021 10:28

It is a relatively small amount and if the director is satisfied that the training is for business purposes as set out in BIM47080, then I wouldn't trouble yourself or HMRC about this.

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By stepurhan
26th Aug 2021 12:28

I understand your concern.

I don't think approaching HMRC at this stage is a good idea. Instead I would recommend highlighting the potential issue with your client (that HMRC may object to the training as not work-related). If he is still happy that his assertion it will benefit the company is correct (making it work-related training) then proceed on that basis.

If HMRC look at it, you may actually have evidence that your client was correct by then to bolster the argument.

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By The Dullard
26th Aug 2021 15:11

It's an allowable expense, because it is remuneration. There will not be a benefit in kind if it fits in with either the work-related training exemption in ITEPA 2003, s 250) or the retraining exemption in s 311 (which is worth thinking about if s 250 won't work, because there's nothing in s 311 that says the employee can't go on to be employed by another employer under the same control, although s 250 might work in such a situation anyway).

The test for the work-related training exemption is not whether the training will benefit the employer company per se, what it says is that the training is "designed to impart, instil, improve or reinforce knowledge, skills or personal qualities LIKELY to prove useful to the employee when performing the duties of the employment."

Likely is highly subjective.

Taking advice from HMRC is substantially worse than seeking enlightenment here, which has been demonstrated to be pretty hit or miss. BIM47080 in particular is absolute b011ox from HMRC in the corporate context.

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