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Special Commissioners' Cases

26 February 2003 / Allison Plager
Issue: 3896 / Categories:

ALLISON PLAGER reports two recent decisions.

ALLISON PLAGER reports two recent decisions.


Firemen's benefit


Many senior fire officers in the Northern Ireland Fire Brigade were provided with motor vehicles which they were required to use in the performance of their duties while on stand-by. An appeal was brought by two such officers, who accepted that the vehicles were a taxable benefit, but that the value of the benefit was nil or considerably less than the amount assessed. The firemen and their union agreed to be bound by the decision of the Commissioners, although the Revenue had not made the same pledge.


The cars were used for work travel purposes, and also to store items necessary for the firemen's work. The roof of each car had a blue flashing light, and other emergency light and sound equipment was also fitted within the car. Both appellants kept privately owned vehicles for personal use, as the vehicles were for brigade use only, and the appellants both said that they never used the brigade vehicle for private purposes. It was not permitted for the appellants to use alternative methods of transport for their work, as the communication and safety equipment would not be available.


The Special Commissioners were satisfied that the predominant reason for the appellants having cars provided was in order to carry out their jobs. Any benefit derived from the car was incidental, and the cars could not properly be described as a perquisite or part of the officers' remuneration.


Assessments had been made on the basis that all the miles travelled in the cars between the officers homes or lodgings to and from the brigade premises amounted to private use. Notwithstanding the fact that the cars were not benefits in kind, this private mileage paid for by the Fire Brigade gave rise to liability under section 154, Taxes Act 1988, according to the Revenue. The gross value of the benefit was prescribed by section 156(5), Taxes Act 1988, i.e. , 20 per cent of the value of the car plus the estimated cost of maintenance and fuel. This was then multiplied by the number of private miles and divided by the total miles to arrive at the assessable value.


The firemen appealed on two grounds. Firstly, the travel between home and work was made in the course of their employment, and if they had to cover the cost of the travel themselves, it would be a section 198(1) expense. The alternative argument was that their homes were working locations, and so there was effectively no private travel.


The Commissioners said that the basic question was, when making the journeys, were the appellants making use of the cars for the private purpose of travelling to work, or were they carrying out their duties with only a negligible value to themselves. They referred to previous case law including Ricketts v Colquhoun 10 TC 118, Taylor v Provan [1974] STC 168, Pook v Owen 45 TC 571, Gurney v Richards [1989] STC 682 and Kirkwood v Evans [2002] STC 231, and concluded that while on stand-by duties the brigade required that the appellants remain within their areas of responsibility, but not in any specific location, so that the choice to sleep in the vicinity was a matter of personal practicality. Thus the home to office travel was private, and provided a taxable benefit. Furthermore, the Commissioners said that having examined the conditions of employment, it was the appellants' choice about where they lived, rather than a condition of employment, so travel expenses would not be allowable under section 198, Taxes Act 1988.


The Commissioners then considered whether or not the cars were being used effectively by the brigade as well as the appellants during the journeys between home and office, and concluded that they were not. The fact that equipment was stored in the cars was incidental. The appellants were permitted, rather than required, to return to their homes or lodgings, but had to keep their equipment by them at all times. Thus the car journeys were made for the appellants' benefit, and not for the purposes of the brigade.


However, rest days and annual leave when the cars were not available, and were, for instance, used by other members of the brigade, should be taken into account and the amounts assessed reduced by multiplying them by the number of days on which the cars were available for private use.


The appeals were allowed in part, in that the assessments were reduced by deducting from the annual value determined under section 156(6) proportioned on the basis described above.


( C L Kerr; J Boyd (SpC 333).)




Foreign delay holds up appeal


In July 1996, a financial institution appealed against the Inland Revenue's refusal of claims to double taxation relief on three foreign dividends paid in 1991, 1992 and 1993. The argument centred over whether expenses of a financial trader should be taken into account in computing the relief.


However, the appellant had been in dispute with the overseas revenue authority, and not been able to pursue the appeal. If the overseas authority won, the payments would not be treated as dividends, with the result that there would be no foreign tax to credit and therefore nothing about which to appeal. The Revenue argued that sufficient time had passed, and that the appellant should pursue its appeal.


The Commissioner said that he was particularly influenced by the fact that even if he did hear the appeal at this stage, it could not be fully determined until the dispute concerning the overseas authority was settled. However, he was reluctant to hold over the appeal indefinitely, and agreed to stand it over as long as the dispute was settled by June 2003. He ordered that the appellant inform the Clerk to the Special Commissioners before 30 April 2003 regarding progress of the foreign dispute.


( A financial institution (SpC 346).)


Issue: 3896 / Categories:
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