Scholarships are benefit in kind

A company awarded scholarships to the two sons of its director while they attended university.

HMRC assessed the amounts as a benefit in kind on the director. He appealed claiming they were not made to him by virtue of his employment at the firm; they were made to his sons who were employed by the business.

The taxman argued that the sons were not true employees because they were employed by the company only before and after university; they did not work at the firm while carrying out their studies. The director was therefore liable to tax on the payments as taxable benefits.

The First-tier Tribunal said ITEPA 2003 s 212 imposed a benefit in kind on the employee connected with the business providing the scholarship not on the person receiving the scholarship when an employer provides a scholarship to worker’s family member.

The Revenue...