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 by employees, not round sum allowances. The existence of a valid dispensation under s.65 ITEPA 2003 was determinative and removed the payments from charge to tax and NICs. HMRC failed to provide sufficient evidence to justify increasing the assessments or to show that the qualifying conditions of the dispensation were not met. The Tribunal exercised its discretion to refuse HMRC's late application to amend quantum, finding it would be unfair and prejudicial to NWMSL.

Citation
[2023] UKFTT 364 (TC)
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
Tax Appeal (first Tier Tribunal, Tax Chamber) / 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, Dispensations, Earnings, Round Sum Allowances
Tax Law Employment Law Social Security Law Income Tax PAYE National Insurance Contributions Subsistence Expenses Reimbursement of Expenses +3 more

Case Brief

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Parties

NWM Solutions Limited

Appellant

The Commissioners for His Majesty’s Revenue and Customs

Respondents

Procedural Posture

Tax Appeal (first Tier Tribunal, Tax Chamber) / 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 of a dispensation under s.65 ITEPA 2003 was determinative of the tax and NICs treatment
  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 by employees, not round sum allowances. The existence of a valid dispensation under s.65 ITEPA 2003 was determinative and removed the payments from charge to tax and NICs. HMRC failed to provide sufficient evidence to justify increasing the assessments or to show that the qualifying conditions of the dispensation were not met. The Tribunal exercised its discretion to refuse HMRC's late application to amend quantum, finding it would be unfair and prejudicial to NWMSL.

Court Disposition

Appeal allowed; Determinations and Decisions set aside.

Orders

  • HMRC's Determinations and Decisions dated 1 November 2017 are set aside.
  • HMRC is denied permission to amend its Statement of Case to increase the quantum.