RME claims the wheels continue to turn

Key points

• In Laing O’Rourke it was the retroactive reclassification of car allowances as ‘not earnings’ that HMRC objected to.
• The Donnelly and Williamson principle would indicate that car allowances should not be earnings at all.
• The judge in WD ruled that no NI was due because the car allowance was relevant motoring expenditure.
• WD views RMEs as being a catch all that brings things that would otherwise not have been earnings back into the earnings net.
• HMRC accepts that for income tax purposes drivers can claim tax relief up to 45p a mile but argues that the NIC reliefs and NIC legislation are different and that no NIC relief is due – other than in rare circumstances.
• In light of SI 2016/352 any company or taxpayer that has not already submitted a protective claim to recover NICs on business mileage should do so.

I refer readers to our...