Inflexible rules

The taxpayer was an employee of a bank. He obtained a mortgage loan at a favourable rate not available to the bank’s customers – which HMRC decided amounted to a benefit in kind in accordance with ITEPA 2003 s 174 to s 176.

The taxpayer appealed claiming he did not receive a benefit because he could have obtained a commercially available mortgage much less than the official rate applied under s 175.

The Revenue pointed out that the official rate was set artificially and did not necessarily bear a relationship to interest rates available to the public.

The First-tier Tribunal said the taxpayer had been caught in a situation in which the amount of his benefit was calculated according to “inflexible statutory rules rather than by reference to the reality of the benefit actually obtained or any criteria designed to achieve a fair outcome”.

The situation...