Accommodation - taxed?

[BAJR Host]

Accommodation - taxed?

I am beginning to receive quite a few emails (and I don't mean one of two) A company, who at the moment will remain nameless had offered free accommodation - now however, ex field staff, are now getting bills from the tax office for the 'free' accommodation.

We are talking of bills that range from a couple of hundred to a couple of grand!

:face-thinks:

I am sure this is an unfortunate problem that can be overcome.. ... what they mind is being offered free.. when, in fact it is not free at all ... and without warning they become liable for large tax bills .

If you are such a person... please be careful.. (remember we must be careful what is said online)

get in touch with me... I will be putting a case together. info@bajr.org


It may be worth looking at this:
http://www.adviceguide.org.uk/index/life...e_benefits

Accommodation

Generally, where any employee, whether higher-paid or not, is provided with accommodation either rent-free or for a very low rent, the difference between the rent paid, if any, and the annual value of the property is taxable. Annual value is usually taken to be the same as gross rateable value (though it will be higher if the accommodation cost more than ?75,000 when it was bought by the employer).

There are three exceptions to this rule. No tax will have to be paid on the accommodation if:-

* it is necessary for you to live in the accommodation to perform your duties properly; or

* it is provided so that you can perform your duties better than you could without it and it is customary in that type of employment to have accommodation provided.




"No job worth doing was ever done on time or under budget.."
Khufu

[Dirty Boy]

I would have thought

*it is provided so that you can perform your duties better than you could without it and it is customary in that type of employment to have accommodation provided"

would be a defence against taxation. Stayaway accomodation is routinely provided on excavations. Also, it's quite arguable that you could perform your duties better if you're not commuting from the other side of the country, but from close to the site!

I'd hope its an oversight by the company by not filling in some random tax form!


Leading a crack team of archaeologists in the hunt for death or glory.

No-one's died yet and I think we lost the glory down the back of the sofa.....

[the invisible man]

I wonder if the 'usual place of work' principle applies here, in a similar manner to the travel rules.

If you live in place A and work in place B, travel to and from work is up to you, as of course is your own accommodation i.e. home. If however you are asked to work at place C for a while then travel to/from B to C and/or accommodation at C is a legitimate expense and not taxable.

I would guess that the effective difference is therefore whether you are employed for a single sprecific project, or on a 'permanent' basis working on numerous jobs.

I hasten to add that is only my assumption, I do not know this for a fact!

[BAJR Host]

Spent most of the day...

talking with tax advisors and technical tax advisors and employer advisors and inspectors etc... seems like there is a good case... if put well, and unified!


It is actually very complicated, and not a straightford one... which is why this can happen! :face-thinks:


I am doing my best to help everyone... both employer and employees .. as both are affected... will keep at it.

Living accommodation: exemption
Where living accommodation is provided there will be no charge to tax and no liability for NICs if:
? T he employer is an individual and the living accommodation is provided in the normal course of domestic or personal relationships or
? the employer is a local authority and the living accommodation is provided to its employees on terms that are no more favourable than those on which similar accommodation is provided by the authority for someone who is not its employee.
There are also four exemptions from the living accommodation charge. These are where:
? the employee occupies the living accommodation as a representative occupier. There is more guidance on this at EIM11336 onwards.
? it is necessary for the proper performance of the employee's duties for him or her to live in that particular property. There is more guidance on this at EIM11341 and EIM11342.
? it is customary in that kind of employment for employees to be provided with living accommodation and the accommodation is provided for the better performance of the duties. There is more guidance on this at EIM11346 onwards.
? personal security is an issue. There is more guidance on this at EIM11361.
Where any of these four exemptions applies there may also be other exemptions and reductions in the benefit charge.



EIM11337 - Living accommodation exemption: meaning of representative occupier
Former representative occupier posts can qualify for exemption from any benefit arising under Part 3 Chapter 5 ITEPA 2003 on provided living accommodation (see EIM11336). A representative occupier is an employee:

who resides in a house provided rent free by the employer and
who as a term of the contract of employment is required to reside in that particular house and is not allowed to reside anywhere else and
whose occupation of the house is for the purpose of the employer, the nature of the employment being such that the employee is reasonably required to reside in it for the better and more effectual performance of the duties.




"No job worth doing was ever done on time or under budget.."
Khufu

[historic building]

Well hopefully the tax office is mistaking temporary accommodation for a permanent provision of housing by the employer. If people have given up their normal accommodation and moved into this provided housing for the course of the job then clearly they have received a substantial financial benefit.

[BAJR Host]

It ain't so easy....

[hm] To say this is my biggest challange is saying something...

For the record... everyone is hit... employer and employees

I have to find the correct words to convince the Inland revenue that this accommodation was required to allow the employee to work...

I would then be able to ensure everyone had the correct info to reclaim... This is not a done deal though... :face-confused:


So far though... all the technical advisors I have spoken to, have agreed that a person coming to an area, for a short/unspecified time, and with a contract that offers free accom... AND the employer is paying the landlord directly, etc... looks like a tax exempt... but I am still to talk with the Inspector who has made the final decision.!

BAJR is very proud and humbled by those that have come to me... I will do all I can.



"No job worth doing was ever done on time or under budget.."
Khufu

[moey]

thanks and double thanks for looking into this!

[BAJR Host]

Getting there.... I need one more t to cross...

I have now discussed with the Tax Office who had the ruling... the final parts I need are a letter... IF... and I mean IF I can get this letter, then everyone who is affected will be able to show this to their own tax office and it can be sorted on a case by case basis. I should know by the end of the afternoon. So cross fingers.... !

"No job worth doing was ever done on time or under budget.."
Khufu

[BAJR Host]

Can I confirm that the letters people are in receipt of are not from the Inland Revenue but from the Company?



"No job worth doing was ever done on time or under budget.."
Khufu

[BAJR Host]

Have now (Friday 11th) had long conversation with tax Office Inspector who made the final descision .. Given the implications and serious nature this has now been escalated to more senior levels.

I have put forward a straightforward case why there is always a need in specific cases, for accomodation to be provided (not as a perk - but as a nesssesity) Given that you may already have a house/flat rent/mortgage and that you are often required to work overtime / weekends.. etc etc.

I have asked for as quick a response as possible... but it could take up to 2 weeks... I have done all I can, and would ask people to hold on...

If the worst happens, we can appeal AND look at ways to minimise the tax payments and how they are colelcted. - but this is not over by a long way.

The Senior Tax Officials will also come back with information on how they will be dealing with all other units. The auditors of the original contractors may have inadvertantly caused some serious angst.

"No job worth doing was ever done on time or under budget.."
Khufu