In NWM Solutions Ltd v HMRC  TC8788, the First Tier Tribunal (FTT) found that as an employer met all the conditions imposed according to a PAYE dispensation covering subsistence expenses, HMRC was bound by that agreement and could not seek to change its view later.
- NWM Solutions Ltd (NWM) made Subsistence payments to its employees based on Scale Rates under a Dispensation agreed with HMRC.
- Employee Expenses were repaid after employees completed and signed claim forms confirming the expenses had been incurred.
- HMRC formed the view that NWM had not met the conditions of the dispensation and issued Regulation 80 Determinations to charge these payments to Income Tax for the tax years ended 5 April 2014, 2015 and 2016.
- NWM Appealed to the FTT.
The FTT found that:
- The payments to the employees were not ‘round sum allowances’ so they would not be subject to Income Tax and National Insurance Contributions (NICs) as earnings as:
- It was satisfied that the employees had incurred subsistence expenditure.
- The expenses scheme was designed, broad brush, to make reimbursement equivalent to expenditure as it was in line with HMRC’s subsistence scale rates.
- A dispensation had been agreed with HMRC was determinative as it had been adhered to.
- NWM had satisfied the conditions contained in the dispensation.
- NWM had ‘sense-checked’ expense claims by checking mileage, requiring travel receipts, checking timesheets and monitoring temporary workplaces.
- Further conditions in the dispensation included keeping ‘sufficient’ records and undertaking ‘routine checks’, these were not further explained: the tribunal determined that the records were kept and checks were sufficient to met these criteria.
- Even if NWM had breached the conditions of the dispensation, HMRC could not issue determinations as if the dispensation was not in effect. The only remedy for HMRC (at that stage) would be to revoke the dispensation.
The appeal was allowed.
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