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PSA for Raffle Prizes?

Christmas raffle for employees, can prizes go through PSA?

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My company wants to do a raffle for our employees at Christmas. There will be around 25 prizes, with there being around 100 employees. Most, if not all, will be vouchers that can be exchanged for services - like a meal at a local restaurant or gym passes. Participation in the raffle will be purely voluntary, only open to employees and any proceeds donated to charity.

I have read much guidance and have come to the conclusion that these will be BIKs, but I can't find conclusive proof as to whether I can put these onto the PSA or whether it will have to be individual P11Ds. Does anyone have any experience of this or can offer any helpful comments?  Does the advice differ if the company provides a tangible prize instead of a voucher?

Replies (16)

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By paul.benny
16th Nov 2021 15:11

Would the prizes qualify as trivial benefits (<£50)?

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Replying to paul.benny:
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By bluesian1210
16th Nov 2021 15:23

no, most would be over £50

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By The Dullard
16th Nov 2021 15:14

Why do you think that these will be benefits in kind, when you suggest that participation will require the purchase of a ticket, and that not all employees will purchase a ticket.

To be taxable, the prize must come by reason of the employment. The prize doesn't come by reason of the employment it comes by reason of having purchased a ticket.

The right to purchase the ticket comes by reason of the employment and the tickets may come within the definition of employment-related security, which would be a reporting nightmare for the sake of a raffle, and there would then be a tax charge if they are provided at less than market value.

Have you ever heard of Secret Santa?

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Replying to The Dullard:
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By bluesian1210
16th Nov 2021 15:32

Very happy to discuss the BIK point and change my view if I can. I've been going round and round in circles on the HMRC advice, it's making my head spin!

Regarding the "not by reason of employment" point, I would wholeheartedly agree with you, but the guidance at EIM16220 states that I'd need to prove that the draw was open to the members of the public as well as employees, which unfortunately would not be the case.

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Replying to bluesian1210:
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By Tax Dragon
16th Nov 2021 16:33

I've not looked back at the EIM extract, but I recall from this thread https://www.accountingweb.co.uk/any-answers/tax-re-prizes-bought-for-emp... that it can be misapplied. Knowingly or otherwise. (See Jon's reply to me.)

But IIRC no-one explained why the tax charge under s201(3) wasn't in point. And I don't buy Dulls's attempt to do so above either.

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Replying to Tax Dragon:
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By Paul Crowley
16th Nov 2021 16:47

I saw Dulls' final comments as jocular, even if a genuine extrapolation from a logical startpoint. If not my "brilliant" comment is misplaced
But then I am a simple accountant, indeed bookkeeper for a lot of my time, not part of the tax techy club.

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Replying to bluesian1210:
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By Paul Crowley
16th Nov 2021 16:36

Is EIM 16220 in any way relevant? Is that is meant to be rewards for turning up on time?
But then all HMRC stuff is just their opinion
If the intension is that the raffle finances itself, then the company has simply chosen to make a charitable donation, in a similar sum.
Blowed if I would be bothered about this
Trouble is I have nothing to quote
So per tax dragon rules this posting should be totally ignored

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Replying to The Dullard:
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By Paul Crowley
16th Nov 2021 16:25

Brilliant

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RLI
By lionofludesch
16th Nov 2021 16:17

Are these employees paying for their tickets ?

If yes, how is this a BIK ?

If no, how are you going to send a charity any money ?

If no, why is it voluntary ? Do you have employees who are ethically or religiously opposed to gambling, even when there are no stakes ?

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By Jane Wanless
16th Nov 2021 16:47

Don't forget to check with your local authority in case you need a licence for the raffle, and for any rules you'd need to comply with.

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Replying to janewanless:
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By Paul Crowley
16th Nov 2021 16:50

IIRC from prior experience then the raffle thing is not a problem within a closed group
The problem comes when selling to the public

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By raycad
18th Nov 2021 11:56

Is it the case that the raffle tickets do not have to be purchased by the employees? Or at least not in a way which, x 100 employees, would cover the cost of the prizes?

Assuming that is the case then I think it is right to conclude that, unless covered by other exemptions or de minimis limits (notably the trivial benefits rules), then the end result must indeed be a BIK. The exercise is clearly designed to foster staff goodwill and to reward the workforce indirectly.

I have included a couple of such raffles in a PSA in the past and have had no issues with HMRC. Well, I can hear the cynics say, you wouldn't have any issues with them, would you? Nevertheless, the costs incurred clearly satisfy one or more (and probably all three!) of the PSA definitions, namely minor, irregular or impractical to operate PAYE on. HMRC's PSA Manual at 1060 to 1080 provides examples and guidance on how these terms are to be interpreted, whilst stressing that the listed examples are not intended to be exhaustive.

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By richard.snape
18th Nov 2021 13:30

If the total cost of the prizes divided by the number of participants were less than £50, could it be argued that staff are being given a ticket which is a trivial benefit and whether their ticket wins is incidental.

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By richard.snape
18th Nov 2021 13:31

Duplicate

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Replying to richard.snape:
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By raycad
18th Nov 2021 15:34

"If the total cost of the prizes divided by the number of participants were less than £50, could it be argued that staff are being given a ticket which is a trivial benefit and whether their ticket wins is incidental."

Well, yes, I guess it could be argued thus. But, for myself, I'm not convinced that that would be the stronger argument and, more to the point, I'm rather doubtful that HMRC could be so persuaded.

In practice, it is virtually impossible to get any kind of ruling from HMRC on this kind of thing. The Unit that deals with the PSAs is in effect a mere processing operation and in my experience you simply cannot draw them into any kind of technical discourse. In reality one would either have to apply for a PSA on the basis of non-triviality or rely on a contestable view re "averaging out", should it be discovered in a PAYE compliance visit etc.

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