Misleading/wrong HMRC manuals

https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim11503

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"Where the accommodation is necessary for attendance at a temporary workplace and Section 338 ITEPA 2003 applies there may be a deduction from the accommodation benefit charge (see EIM31816 and EIM32075)."

EIM11503 - Living accommodation: business use of accommodation - HMRC internal manual - GOV.UK (www.gov.uk) , https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim11503

s 338 (and s339) say no such thing about "the accommodation is necessary". That's s99(1) ITEPA 2003 (which is not relevant here: https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim11341). We never hear about the -ve tax gap do we i.e. tax being overpaid coz of bad HMRC guidance like this?

 

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By Tax Dragon
18th Jun 2024 06:03

It is slightly sloppy wording*, but I doubt anyone is paying too much tax because of it. You could have picked a more egregious example to make your point, whatever that is.

* It should perhaps say "Where the accommodation is for the necessary attendance at a temporary workplace..." Or better nothing at all - simply "Where Section 338 applies**..." would cover it.

** Or perhaps here "would apply", as we're pretending the worker is bearing the cost.

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Replying to Tax Dragon:
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By Justin Bryant
18th Jun 2024 10:34

It should simply say "Where the accommodation is provided for attendance at a temporary workplace"

The word "necessary" has no place here at all and is particularly confusing re s99(1) is my point (as the self-appointed queen of ITEPA you should know that).

For example, if a director of a company that own a holiday cottage many miles away (from his main home) spends one night a week staying there in order to tart it up etc. then that should be relieved from being an accommodation BIK, due to temporary workplace relief (even though he could equally stay in a nearby hotel i.e. it is not necessary).

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Replying to Justin Bryant:
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By Tax Dragon
18th Jun 2024 11:35

The HMRC comment is based on s338, not s99.

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Replying to Tax Dragon:
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By Justin Bryant
18th Jun 2024 12:25

Go back to sleep!

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Replying to Justin Bryant:
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By Tax Dragon
18th Jun 2024 13:31

Wake up!

And maybe reread the manual, Ss364 and 338 and this thread.

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By Tax Dragon
18th Jun 2024 06:46

Where there has been an accepted view that is eventually overturned in court, it's likely that previously some people had paid more tax than necessary. Almost by definition, HMRC does not challenge an accepted view.

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By Ruddles
18th Jun 2024 17:26

It seems to me that someone has simply misconstrued HMRC’s words. In particular, overlooking the point that the test comprises two distinct limbs. Of course, the fact that that is so would suggest that the wording could be improved.

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Stepurhan
By stepurhan
19th Jun 2024 08:19

Regardless of whether the wording could be improved, who do you think is going to lose tax on this? Who are you expecting to be providing accommodation for an employee at a temporary workplace and not think it necessary?

I'm also very unclear on what you think your example of staying at a property someone is fixing up as opposed to a hotel adds to the conversation. The nature of the accommodation does not affect the tax treatment any more than choosing business class over a standard ticket would affect the tax treatment of a journey.

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Replying to stepurhan:
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By Tax Dragon
19th Jun 2024 11:14

stepurhan wrote:

The nature of the accommodation does not affect the tax treatment any more than choosing business class over a standard ticket would affect the tax treatment of a journey.

That's not entirely correct. You wouldn't consider a BIK charge under the living accommodation rules for an overnighter in a B+B or hotel. You should consider such a charge where the accommodation is in a house that the company owns.

Justin has already explained everything else.

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Replying to Tax Dragon:
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By Tax Dragon
19th Jun 2024 11:19

Additonal: there may be ATED consequences to an overnight stay in the company's house that would not follow from a stay in the hotel - so the tax differences may in fact be quite considerable. [But that's outside the scope of the thread.]

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