Andrew Park, Tax Investigations Specialist and Partner at Price Bailey, highlights the tax treatment of non-cash benefits, particularly where individuals receive valuable services in connection with their role.
He said: “Tax legislation is very widely drawn so that it can catch situations where somebody receives a valuable gift — whether that’s cash, a watch, or expensive personal legal advice — in circumstances where the facts suggest that thing would not have been received were it not because of and in relation to what that person does for a living.
“Whether that’s their vocation as a jockey, a lawyer or an MP — in such circumstances, HMRC can be expected to want to access such receipts as taxable earnings and to take a dim view of anybody who fails to disclose them.”
He added:
“The situation often arises, for instance, when the employees of law or accountancy firms are given valuable gifts by grateful clients of their firms, such as watches and jewellery.
“It does not matter that the recipients are not directly employed by the donor — the gifts are still in relation to their employment — and the recipients are placed in the position of either having to reject the gifts or pay tax on them.”
“Often the position can be nuanced and finely balanced because of a personal friendship or a family connection but the analysis is more clear cut where a gift is made by an institution, such as a political party, to one of its MPs.”
For further advice on the tax treatment of benefits in kind, contact Price Bailey.
