Income Tax: how does it work?

In message , Simon writes

Do you mean something similar to 'benefit in kind'? From time to time, I used to go to various things (as I said above). However, there was never any question of me being asked to pay tax for the 'pleasure'. All reasonable expenses were reimbursed by the employer, and I certainly paid no tax on these. All were deemed to be directly associated with my work (even those which had the occasional element of 'jolly' content). I have no idea what proportion of the expenses were tax-deductible (or offsetable) when my employer paid his taxes.

In the main, for the ordinary worker (including the professional who makes fairly frequent business trips), paying income tax is nowhere near as complicated as is sometimes made out, provided you (and the employer) know a few basic rules. I hope that the OP hasn't been discouraged by some of the advice given.

Because it is not an expense that all teachers have to incur. It might be an expense that allows them to do it better but attendance at the conference was not in the performance of the duties, so if the attendance is excluded, so is the travel and subsistence.

Thats because this is standard HMRC stuff. It not just my opinion but it is also the opion of the stuffy old senile but highly paid judges who sit on such matters.

As I said to Ronald, I will look this up tomorrow when I have access to my specialist and will post tomorrow evening.

Work related training does not fall within S336 but within S250. This does allow for an employer to provide work related training and is quite loosley worded but this does not allow for an employee to make a claim for a deduction. This means that if an emplooyer pays for it its ok, but if the employee pays for it he cant claim rembursement no make a claim on his tax return.

No, a salesman travelling to customers is carrying out the duties of his employment, so th travel is in the performance of the duties and a deduction is available under S337/8

Quoting from EIM70711 - Tax treatment of teachers, lecturers and tutors: Association of University and College Lecturers: notes on expenses deductions: expenses of attending courses, conferences, etc

Note: the concession referred to in this paragraph has been withdrawn for payments made after 31 August 2000

This concession does not, however, extend to expenses in respect of courses which require part-time attendance or last for less than four weeks, or where the teacher is not seconded on full salary. Such expenses must be considered under the strict rules of Section 198(1) and are therefore not admissible. Similarly no deduction can be allowed for attending professional conferences etc as these are normally considered to be outside the scope of Section 198(1). Moreover, where the teacher attends in an official capacity, his expenses are usually reimbursed."

So where does it say that academics are in the performance of their duties?

Simon

Deemed by whom, my experience is that this is deemed by the employer as not taxable and omitted from the P11D. If it is shown as an expense, it is often shown in the box where a deduction is claimed and unless one of my ilk takes up the employer for review and actually gets to see the details of the expenses claimed, there is no challenge.

The departments habit of assess and allow for relatively small amounts on P11Ds and process now, check later for SA means that unless you or your employer are unlucky enough to get picked up for a complianc check, nothing will get picked up.

I agree in the main, but there are expenses that fall outside of the normal rules and these are where employers and employees get into trouble.

A recent review identified that the majority of the public do not set out to evade tax and so wants to put in place something that recognises the taxpayers behaviour.

The new tax year started with a new set of rules on penalties. Something that is new to this is the principle of reasonable care. If someone takes reasonable care but still falls foul of the system, they will be asked to address the underpaid duties and interest but they wont be asked to pay a penalty. The big question is what is reasonable care. Did they just pay the expenses and not check the rules, did they ask the knowitall down the pub or, did they phone their accounrtant, the tax man, look up the guidance on HMRC website, check out the trade organisation. All or any of those may be enough depending on who is asking the question. Even then, if ot reasonable care but not deliberate evasion, then a penalty may be suspended and provided there is no future transgressions within the next two years, the penalty can be suspended.

I do wish you'd read what I've written before replying. We are (well, I am) considering whether the requirement of the job (not necessarily of the employer) makes attendance at, say, a conference of the leading thinkers and researchers "necessary". I say it could well do so. That is a very large part of what what academia is about.

Please remember that, like so many other things in the HMRC manuals, you "inspectors" are constantly reminded to look at the facts of the particular case.

We're not talking about that.

So is a don who attends a conference because his JD and the requirements of the job necessitate it.

You've conveniently skipped the preceding page, EIM70710, which says, inter alia, ...

"Teachers involved in degree level work in universities ... are, however, normally under some obligation to engage in research ... Where ... there is a clear obligation to engage in research... and in respect of which reimbursement is not available ... an allowance may be claimed. Research has been defined ... as including the acquisition, dissemination and application of knowledge, skills and techniques".

Incidentally - your bit about "This means that if an emplooyer pays for it its ok, but if the employee pays for it he cant claim rembursement no make a claim on his tax return." [sic] conflicts with HMRC stuff which says that it is the requirement of the job, rather than the employer, which [can] determine whether it is deductible.

And, frankly, a criterion of "reimbursement by the employer" is potty, since a salary sacrifice would secure tax relief.

Please, please, please, before you reply - think about the job which Leo does. Don't fall into the trap of assuming no job could conceivably require attendance at relevant conferences.

But clearly if your employer does not see it as necessary then clearly it cannot be for your employment.

You may see it as improving your ability to be employed in the future, or your standing in academia, but it is not required for you to do your job.

As far as i can see, nobody has yet suggested tha tthe OP should ask for a tax return and claim for these costs, with a covering letter, and see if the HMRC will allow them.

The worst that can happen is that they will strike them out.

Robert

The worst will happen.

"RobertL" wrote

Are you suggesting that the OP should make a (possibly false) declaration, unaware whether it is true or false, and sign it to say it is true?

"RobertL" wrote

... and possibly get some serious grief from making a false declaration?

What gives you that idea? He is suggesting that the OP should make factual declarations that he has incurred the various expenses which have been discussed. By doing so he hopes they will be allowed as deductible, but he would not be declaring that they are in fact deductible, since he cannot be expected to have the expert knowledge on which to base such a judgement.

"Ronald Raygun" wrote

Hmmm. Which box(es) on the tax return are for "expenses which may or may not be allowable"?

In other words, where on the tax return is he meant to put those expenses which he isn't sure are allowable or not?

He's not expected to be sure. He's expected to have read the notes and then, on the basis of how he understands them, to enter those expenses which he reasonably believes to be allowable. It is then up to the HMRC bods to determine whether they are in fact allowable, taking into account the comments in the covering letter.

SA102, boxes17 to 20 inc.

There is no requirement for "being sure" - not even HMRC has that imposed upon them. Hence commissioners, and [as Simon so eloquently expressed it] "stuffy old senile but highly paid judges who sit on such matters".

Incidentally, tax compliance is treated with such indifference by the powers that be that fees incurred by the Sch.E tax-payer for ensuring it are not allowable.

Interestingly, "SA102 notes" is pretty clear about the eligibility of stuff which Simon says is not allowed. It also talks about "... you may deduct..." - yet (unless you do your own tax calc) no deduction is done - except by HMRC's computers.

I am note so sure about the letter attached to the return as they are bound to be seperated, especially if they are one of Peters clients.

There is nothing stopping the individual writting to HMRC in plenty of time for HMRC to consider the facts and write back so that the return can be made in good time. It would be the actions of a reasonable man to seek advice from the competant authority before making the return. Then, even if the return is wrong, unless the facts have been misrepresented in the letter, the taxpayer would be immune to requests for additional tax, let alone interest or penalties.

If you are English, you get nailed to the wall. If your eastern european or a foreigner, just earn the dough and send it home. That's not how it should work, just how it does work.

Martin, I have thought about the trade or profession and this is one of those area where you have seen something that you think is a get out clause and taken from this what you want to see and not what is actually there.

The tax case is Owen vs. Burden which related to the costs of an overseas conference. The fact it was overseas is actually irrelevant. In fact, Lord Justice Buckley said the following.

"Although there were no doubt advantages in the taxpayer's attending the world road conference in Tokyo on 1 November 1967 to 23 November 1967 in which respect the expenditure was incurred, and advantages which accrued for the benefit of his employers as well as to him personally, I do not feel able to see how on the facts as found in the case it could be said that he was necessarily obliged to undertake this journey or to attend this conference or that the money was necessarily expended in the performance of his duties."

This points out that it doesn't matter who benefits from the cost being incurred, it is only allowable if the necessity is imposed by the duties of the employment and that is not the case here.

You pointed to the HMRC guidance and this clearly stated that attendance at certain training events was allowed by concession but the concession was withdrawn in 2003 and that Conference costs were not included as they could not satisfy S198(1).

As to salary sacrifice, what are you on about. How can someone make a permanent sacrifice of salary on the off chance that they might get sent on a conference. Who in their right mind would do this?

Please, please, please, before you reply - think about just how hard it is to get a deduction under S336. Don't fall into the trap of thinking that just because you want to have a deduction for an expense you can bend the law to suit your purpose.

I have read EIM70710 as suggested and find this to be as restrictive as S336/S337. I have seen nothing from the OP that suggests that he is working on his JD nor is he conducting research or whether this is specific to his subject. Even then, this does not suggest that attendance at a conference is considered as research and lastly, for the costs to be accepted, they have to be moderate. This is a relative term and as about as helpful to the public as using terms like minor or trivial without defining what they mean. Frankly, I think of trivial as £10-£40, Minor as £40 - £100 and moderate being a few hundred at most. However, I am sure that what is moderate to a teacher at South Thames Uni is going to be a bit different to a senior professor at Oxbridge, but hey, whoever said taxation was easy.

Wouldn't it be better to put it in the white space?

Can you imagine what would happen if all tax payers stopped using accountants and instead sent in their accounting records with their tax returns and asked HMRC to sort it out!?

You don't even have to earn the money. Claim the benefits and go back home. Get the correspondence sent on.

Wouldn't it be better to put it in the white space?

I am not sure that info in the white space is always captured.

Can you imagine what would happen if all tax payers stopped using accountants and instead sent in their accounting records with their tax returns and asked HMRC to sort it out!?

Lots of people would get fined for not making there returns.

If they fill in the form (when in doubt using the most advantageous entries for the tax payer) and list queries would that be acceptable? I would think that would put great pressure on HMRC resources.