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HMRC have announced a ‘time-limited opportunity’ to resolve a long-standing dispute over a scheme designed to reduce income tax and National Insurance liabilities on employer-provided accommodation.
The scheme involved the use of lease premium arrangements by employers, often via an employee benefit trust or similar entity, to provide living accommodation to employees with the intention of minimising the tax and National Insurance charge on the benefit of the accommodation.
The taxman challenged such arrangements, and legislation was introduced in FA 2009 to confirm that the arrangements were ineffective.
Employers or employees using the arrangements before the change in legislation are now invited to reach a financial settlement with HMRC to resolve the issue.
Taxpayers or their agents who wish to register an interest in reaching a settlement should contact Norman Morley or Dave Feldman by 5pm on 6 August via the Revenue's website.
Cases settled by way of contract settlement will be final, say HMRC, and will not be reopened in the event that subsequent litigation is decided in favour of either the taxpayer or HMRC.
PKF’s John Cassidy said the Revenue issued a similar letter some time ago on the same subject, and he suspected ‘only a handful of cases’ would benefit and the ones most likely to come forward are those who would agree with HMRC or are ‘risk averse’.
George Bull of Baker Tilly remarked that ‘a lot of work will need to be done’ before deciding whether or not to accept the taxman’s offer, particularly bearing in mind that cases will be final regardless of the outcome of future litigation.
