NWM Solutions Ltd v Revenue and Customs (INCOME TAX - PAYE - National Insurance Contributions - subsistence expenses - earnings - reimbursement of expense) [2023] UKFTT 364 (TC) (04 April 2023)

NWM Solutions Ltd v Revenue and Customs (INCOME TAX - PAYE - National Insurance Contributions - subsistence expenses - earnings - reimbursement of expense) [2023] UKFTT 364 (TC) (04 April 2023)

The Tribunal found that NWMSL's payments were reimbursements of expenses actually incurred, not round sum allowances, based on the evidence of signed claim forms and supporting survey data. The existence of a valid Dispensation was determinative, removing liability to tax/NICs for the relevant payments. HMRC was not permitted to amend the quantum at a late stage without sufficient evidence or justification, and the Tribunal was not satisfied that NWMSL was undercharged. Accordingly, the Determinations and Decisions were set aside.

Citation
[2023] UKFTT 364
Parties
Appellant: NWM Solutions Limited; Respondents: The Commissioners for His Majesty’s Revenue and Customs
Jurisdiction
United Kingdom
Judgment Date
04 April 2023
Procedural Posture
Appeal (first Tier Tribunal Tax) / Final Judgment After Substantive Hearing
Outcome
Appeal allowed; Determinations and Decisions set aside.
Legal Topics
Income Tax, PAYE, National Insurance Contributions, Subsistence Expenses, Reimbursement of Expenses, Dispensation Notices, Procedural Fairness
Tax Law Employment Law Social Security Law Income Tax PAYE National Insurance Contributions Subsistence Expenses Reimbursement of Expenses +2 more

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Parties

NWM Solutions Limited

Appellant

The Commissioners for His Majesty’s Revenue and Customs

Respondents

Procedural Posture

Appeal (first Tier Tribunal Tax) / Final Judgment After Substantive Hearing

Legal Issues

  1. 1 Whether payments made by NWMSL to employees for subsistence expenses were 'round sum allowances' or reimbursement of expenses
  2. 2 Whether the existence and terms of the HMRC Dispensation were determinative of tax/NIC liability
  3. 3 Whether NWMSL satisfied the qualifying conditions of the Dispensation

Ratio Decidendi

The Tribunal found that NWMSL's payments were reimbursements of expenses actually incurred, not round sum allowances, based on the evidence of signed claim forms and supporting survey data. The existence of a valid Dispensation was determinative, removing liability to tax/NICs for the relevant payments. HMRC was not permitted to amend the quantum at a late stage without sufficient evidence or justification, and the Tribunal was not satisfied that NWMSL was undercharged. Accordingly, the Determinations and Decisions were set aside.

Court Disposition

Appeal allowed; Determinations and Decisions set aside.

Orders

  • HMRC's Determinations and Decisions dated 1 November 2017 are set aside.
  • No increase in quantum permitted; HMRC to argue quantum as pleaded.