David Hartnett, the permanent secretary for tax at HMRC tops up the "gravy train" as the most wined and dined mandarin in Whitehall.
According to a report by the Bureau of Investigative Journalism, Dave has accepted invitations to eat and drink 107 times over the past three years, receiving a large number of invitations from accountancy firms and he obtained more free lunches from KPMG than any other firm.
Does this mean a benefit in kind?
Readers might ponder whether Dave has been racking up any taxable benefits in kind during the course of his dining experiences.
The answer is found in Section 265 of ITEPA 2003 which provides that there will be no taxable benefit providing the following conditions are met:
- The person providing the entertainment is neither the employee's employer nor a person connected with his employer
- Neither his or her employer nor a person connected with their employer has directly or indirectly procured the provision of the entertainment
- The entertainment is not provided either:
- in recognition of particular services that the employee has performed in the course of his or her employment or
- in anticipation of particular services that are to be performed by him or her in the course of their employment.
The final point in s.264 probably raises more issues than it clears up, because to be frank the main reason that people want Dave on their guest list is that he heads up HMRC. So surely, there has to be an expectation and so "anticipation" that the act of entertaining will influence "the particular services that are to be performed by him in the course of his employment" (as as a permanant secretary). Otherwise why bother?
Happily, for those who do benefit from third party entertaining, and for those who ponder as to who should then report the benefit, this point is never stretched too far in practice.