COMPLIANCE
agreement that the Dispensation in this case was in force at all material times. As a result, we consider that the only factual question which arises for determination at this point is whether NWMSL had an obligation to account for tax for reasons unrelated to s.65, per Reed FTT at [292]. If the answer to that is 'yes', then then NWMSL would have to account for that tax (because s.65 and the Dispensation would be irrelevant, whether or not in force). But if not, then Reed at [334]-[337] is clear in our view that the Dispensation was “fully effective…unless and until revoked”. Most importantly, our own construction of s.65 leads us to the same conclusion. “We have concluded that the 'listed provisions' in s.65(1) did apply to the payments subject to this appeal because (unlike those in Reed), we found above that, being the reimbursement of expenses incurred by employees, the payments were within the scope of Chapter 3, which is one of the 'listed provisions' in s.65(1). “As a result, we have decided that the reasoning in Reed at [334]-[337] applies, as contended by Mr Ewart. The effect of the Dispensation is therefore that…all
the payments subject to this appeal were automatically removed from any liability to tax.” This was a turning point for NWM because the FTT considered that, as HMRC hadn’t revoked the dispensation, the tax and NICs weren’t payable, as the spirit of the dispensation was to provide an administrative easement. Conclusion In allowing the appeal in full and setting the HMRC determinations aside, the FTT concluded: “… the effect of a dispensation is to remove relevant payments entirely from the scope of taxation. We therefore conclude that unless and until a dispensation is revoked, it is not open to HMRC to assess to tax any payment purportedly made under it. In this case, the parties were agreed that the Dispensation was never revoked by HMRC. Accordingly, even if HMRC were right to say that NWM was in material breach of the conditions in the Dispensation, they could not issue the Determinations and Decisions, and it would have been irrelevant even if NWMSL was found to be in material
breach of the conditions purportedly contained in the Dispensation.” It’s therefore worth reviewing cases such as this when the taxman comes to call. In this case, the employer saved the best part of £2 million. n
Links corner In order referenced in article.
NWM Solutions Ltd v HMRC: https://ow.ly/wlok50PPFgE EIM05231: https://ow.ly/BCQU50PKART Section 65 ITEPA 2003:
https://ow.ly/RuHh50PKAVU Section 70(2)(c) ITEPA 2003: https://ow.ly/wwqf50PKAZG Finance Act 2015: https://ow.ly/2Nu550PKB9G
Section 289 ITEPA 2003: https://ow.ly/r83550PKEmP Section 289A(4A) ITEPA 2003: https://ow.ly/iBkx50PKEpa Finance Act 2019: https://ow.ly/g9Q250PPFmk EIM30225: https://ow.ly/pbCp50PKFws
Section 65(6) ITEPA 2003: https://ow.ly/PkWJ50PKFze.
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* https://www.thepensionsregulator.gov.uk/en/business-advisers/automatic-enrolment-guide-for-business- advisers/what-happens-if-my-client-doesnt-comply-or-is-late-complying
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| Professional in Payroll, Pensions and Reward |
Issue 94 | October 2023
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