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HMRC have published three questions and answers for employers about the new rules that apply from 6 April 2011 for salary sacrifice and canteen arrangements.
First, with regard to existing arrangements, HMRC say they will continue to challenge arrangements that they consider may not be effective, on a case-by-case basis. The legislation does not affect the arguments that the Revenue has been running in existing compliance cases.
Second, it has been suggested that the April 2011 commencement date for the FA 2010 change gives some employers, who may have ineffective arrangements, time to review their arrangements while other employers remain the target of HMRC compliance.
In this respect, the department says the start date is intended to give employers with effective existing arrangements reasonable time to consult their employees, consider their options and make changes to their arrangements, if they so choose. It is not a period of grace for all employers with existing arrangements.
The Revenue says it will continue to subject employers to technical challenge on the basis of the current legislation where it considers that arrangements are not effective.
The third question looks at circumstances when HMRC would accept that existing canteen arrangements are effective. They say that, as explained in Employment Income Manual EIM21675, arrangements do not result in the employee having earnings where the employee loses the value of any free or subsidised meal that he could have had on a day when he chooses not to access the canteen.
