Cake Friday vs HM Revenue & Customs
A couple of weeks ago Madgex had a visit from HM Revenue & Customs to review our PAYE tax payments. While in the office they informed us that providing cake on a Friday maybe a taxable benefit. We received this judgement by letter.
“Friday cake The provision of cakes on a Friday is a different matter altogether. As I understand the position, the company provides cakes for all staff generally on a Friday. What is crucial here is that the meal (cakes) is provided to staff generally, its cost is reasonable in scale and in this instance free for staff. As such the provision of the Friday cakes under the circumstance described do not create a chargeable benefit in accordance with Section 317 Income Tax (Earnings and Pensions) Act 2003(ITEPA 2003). I have used the definition of a meal from the Pocket Oxford Dictionary 1972 Reprint as being ‘taking of food’. If I am incorrect in that regard relief will be available under the departments guidance for dealing with trivial benefits. There is no monetary limit to determine what is a trivial benefit. In essence a chargeable benefit will arise on the provision of cakes however, it is deemed trivial because it is perishable and/or consumable.
I am of the opinion that the cakes provided on Fridays to all staff qualifies for relief under Section 317 ITEPA 2003 and also satisfy the trivial benefit criteria. As such the department will not seek to bring that benefit in to charge. Therefore the company can continue to provide cakes to all staff in the same way as the past without the need to declare the benefit or pay any Class 1A National Insurance.”
We are now considering renaming “Cake Friday” to “Section 317 ITEPA 2003 Friday” in thanks of the enlightened decision of Revenue & Customs. Although we were wondering how they could calculate the national insurance tax due for a slice of cake.
Comments
1
Simon Conroy
It's all good. I was keeping this in reserve to really treat the team, but the Act, under the Trivial Benefits definition, also permits 'a seasonal gift of a turkey or an ordinary bottle or two of wine'......... gobble gobble
Posted 10 February 2008 04:50
2
Simon Harriyott
It would have cost them more to write that explanation than they would have gained anyway...
Posted 10 February 2008 21:43
3
Jane Dallaway
Thank goodness for that - if there were no cakes to come back for I might just have had to stay in the US :-)
(spotted via Bruce's tweet)
Posted 13 February 2008 19:44
4
laxman
bad
Posted 14 February 2008 08:17
5
Iain Holder
I wonder what their definition what an 'ordinary' bottle is.
Is it:
a) 20/20 (Strawberry)
b) Earnest & Julio Gallo Rose (on offer at £4.99)
c) 1961 Petrus @ £7.5k a bottle. That's ten quid a ml! 0_o
http://www.antique-wine.com/product_info.php?products_id=43965
Posted 16 February 2008 15:27
6
Guillaume Finance
did they (or he/she) actually taste the cakes...?
Posted 19 February 2008 09:29
7
Tom Nixon
I think that essentially they were telling you that you could have your cake and eat it. You should frame the letter because it's probably a first for the Revenue :)
Posted 20 February 2008 23:48
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