Baylis v Revenue and Customs (INCOME TAX/CORPORATION TAX : Employment income) [2016] UKFTT 725 (TC) (26 October 2016)

Baylis v Revenue and Customs (INCOME TAX/CORPORATION TAX : Employment income) [2016] UKFTT 725 (TC) (26 October 2016)

Ms Baylis contracted with the care home as agent for VWML, not personally. The benefit in kind charge for the care home fees does not fall on Ms Baylis because, under ITEPA, where two employees are potentially liable for a benefit provided for a family member, the statute gives priority to the spouse (Mr Baylis) over the child (Ms Baylis). Employers cannot choose which employee is liable. Personal expenses paid by VWML were already accounted for as dividends and not taxable as additional benefits in kind.

Citation
[2016] UKFTT 725 (TC)
Parties
Appellant: Sarah Baylis; Respondents: The Commissioners for Her Majesty’s Revenue & Customs
Jurisdiction
United Kingdom
Judgment Date
26 October 2016
Procedural Posture
Income Tax Appeal / First Tier Tribunal (tax Chamber) Substantive Decision
Outcome
Appeal allowed
Legal Topics
Benefits in Kind, Employment Income, Agency Law, Discovery Assessments, Dividends and Personal Expenses
Tax Law Employment Law Benefits in Kind Employment Income Agency Law Discovery Assessments Dividends and Personal Expenses

Case Brief

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Parties

Sarah Baylis

Appellant

The Commissioners for Her Majesty’s Revenue & Customs

Respondents

Procedural Posture

Income Tax Appeal / First Tier Tribunal (tax Chamber) Substantive Decision

Legal Issues

  1. 1 Whether the contract with the care home was made by Ms Baylis personally or as agent for VWML
  2. 2 Who is liable for the benefit in kind charge under ITEPA when a benefit is provided for a family member
  3. 3 Whether personal expenses paid by the employer were already accounted for as dividends

Ratio Decidendi

Ms Baylis contracted with the care home as agent for VWML, not personally. The benefit in kind charge for the care home fees does not fall on Ms Baylis because, under ITEPA, where two employees are potentially liable for a benefit provided for a family member, the statute gives priority to the spouse (Mr Baylis) over the child (Ms Baylis). Employers cannot choose which employee is liable. Personal expenses paid by VWML were already accounted for as dividends and not taxable as additional benefits in kind.

Court Disposition

Appeal allowed

Orders

  • Assessments for both years set aside in full
  • Parties to discuss and clarify the position for 2011-12