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s336 itepa - employee expenses

HMRC's interpretation in EIM31630 appears to be more restrictive than the legislation

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ok, so s336 itepa is basically the wholly, exclusively and necessarily rule for an employee claiming job related expenses.

However EIM31630 also includes the following - 'the expense must be one that each and every holder of that employment would have to incur'

This would therefore appear to be much more restrictive. For example, an employee now working from home is provided with a 'pool' laptop by their employer, but decides to buy their own brand new one, which doesnt take 20 minutes to boot up etc, doesnt freeze etc etc.

Although the expense meets s336, EIM31630 would appear to deny relief on the basis that he bought it of his own volition. HMRCs example at  EIM31643 - (employee provided with uncomfortable overalls buys his own)

has anyone seen or heard of a claim being denied on this 'each and every holder' rule?

 

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By Tax Dragon
28th May 2020 10:06

ok, so I think you could do with reading s336. The first bit, appropriately called "(1)(a)", limits relief to expenses that the employee is obliged to incur and pay as holder of the employment. Anyone holding that employment would be under that obligation. So you're already wrong to say:

mattydav wrote:

Although the expense meets s336

in relation to your laptop example, but for good measure, you also fail (1)(b) - that the expense is incurred wholly, exclusively and necessarily in the performance of the duties of the employment - unless, unusually, buying laptops is one of the duties of the employment.

But to answer your question, read EIM31641 for an explanation of 'each and every'.

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By SteveHa
28th May 2020 10:27

The "each and every holder" covers the "necessarily" part. If it is not the case that "each and every" holder of the position is required to incur the expense, the surely it isn't necessary.

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Replying to SteveHa:
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By Tax Dragon
28th May 2020 11:02

As the OP says, this is all moot, but I disagree. I think it is wrong to disassociate "necessarily" from "in the performance of".

FWIW, I take "each and every" as interpreting (1)(a).

(But, if I could be bothered to read it, there's a tax case which would tell us which, if either, of us is right, referred to in the manual reference I gave above.)

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Replying to Tax Dragon:
By SteveHa
28th May 2020 11:09

But, S336 is not an "either" clause, it is an "and " clause, and whilst I agree that the each and every interpretation is a stretch, it's a reasonable stretch. If it wasn't necessary (1)(b) then no-one would need to incur the expense. If it was necessary, then it would be necessary for everyone doing the same job.

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Replying to SteveHa:
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By Tax Dragon
28th May 2020 11:32

I don't feel strongly enough to argue (I'd rather Wolfie sent his heavies round). It could just be that I get hung up on individual words [(a) refers to "holders" and (b) to "duties" - and "each and every" refers to "holders"]; your reading style maybe more holistic, taking the sentence as a whole. Whatever, we reach the same conclusion.

I might read the case, for light relief. I suspect it views the section in the round - your approach. That's probably a better approach for determining the purpose of a section. Maybe I've come to this profession too late - I'd've been happier in the old, literal reading, days when Mum and Granddad did this work.

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Replying to Tax Dragon:
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By Tax Dragon
28th May 2020 13:44

Lockdown must be becoming boring.... I have actually looked up the case.

Tax Dragon wrote:

Maybe I've come to this profession too late - I'd've been happier in the old, literal reading, days when Mum and Granddad did this work.

Hmmm. Looking at cases like this makes me wonder about that.

The case was heard by HL in 1925 (!), so even before Granddad. While I don't have a copy of ITA 1918 to hand, it sounds as if it's the same test - or tests - though possibly not split into (a) and (b). Coincidentally, it concerned travel to work and hotel expenses. (There is now specific provision in that regard, of course. I guess back then there wasn't.) Both costs failed both (a) and (b), as they now are.

There's only one mention of "each and every" that I can see, but the point is that the tests relate to the employment, not to the employee. HMRC possibly overplays the "each and every" phrase in trying to explain that point.

I'm not sure I'm any the wiser.

Now, Wolf, pleeeease.... the heavies?

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By mattydav
28th May 2020 10:31

I take your point on (1)(a).
re (1)(b) - surely if you need to buy a laptop in order to be able to perform your duties of employment then that condition is met?
a moot point anyway if 1a fails.

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Replying to mattydav:
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By Tax Dragon
28th May 2020 10:56

Buying the laptop is putting yourself in a position to perform the duties. (It's a bit like the capital/revenue distinction, in that regard.)

Another example of this - from the good old days before the pandemic and lockdown - would be travelling to work. It's not a duty of the employment, but it is (or was) necessary for performing the duties of the employment.

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Replying to mattydav:
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By SXGuy
28th May 2020 11:15

There's already a laptop given to the employee by the employer, the fact the employee wishes to buy a newer on, because its faster, is not in my opinion, an argument for whether its a requirement.

The employer issued laptop, still performs its function to carry out the job, regardless.

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Replying to SXGuy:
By SteveHa
28th May 2020 15:15

I can't remember the case, and I'm sure it's 30 years ago, but I'm pretty sure the tribunal (or the Commissioners, it's probably that old) concluded that because provided equipment was carp, it served it's purpose, and so personal upgrades failed the test.

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By RetiredTax
28th May 2020 22:58

The legislation sets out the (basic) requirements but are then really defined by case law over the years. This is possibly the most "case law tested" section in all tax legislation and very difficult to change/overturn.
If my old memory serves me well, have a look at Rickets v Colhquon* - A very old/long standing case which defined the "each and every holder" principle. I wouldn't put any money on winning this one with a technical argument.

* ?? spelling uncertain

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Replying to RetiredTax:
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By Tax Dragon
29th May 2020 07:21

Your memory is in decent shape. When training, I jammed a whole load of case law into my head, but I wonder how much remains.

The case you recall is the one I refer to above, interpreting ITA1918 in 1925. But whereas your memory impressively gave you that, I needed the manual to give me the prompt.

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