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09 April 2014

UT Decsion: Reed Employment v HMRC

INCOME TAX and NATIONAL INSURANCE CONTRIBUTIONS – allowances for travel and subsistence costs- character of allowances – whether earnings under ITEPA Part 3 Chapter 1 – Yes – or sums treated as earnings under ITEPA Part 3 Chapter 3 – No – whether recipients had permanent or temporary workplaces – permanent – travel costs ordinary commuting expenses and not deductible – whether allowances within dispensations granted pursuant to ITEPA s65 –No –whether dispensations could lawfully be granted – No

JUDICIAL REVIEW – whether appellants had legitimate expectation that allowances would not be subject to income tax and NICs and that dispensations would not be revoked and HMRC would not seek income tax and NICs from employees retrospectively – No

Whether appellants under obligation as employers to make PAYE deductions in respect of allowances paid – Yes – appeal and judicial review application dismissed

David Ewart QC, instructed by Slaughter & May, acted for the Appellants.

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