Taxation
The UK’s Office of Tax Simplification (OTS)1 has recently been conducting a review
of employee benefits and expenses. It published its final report in July this
year2.
OTS reviewed most benefits-in-kind (BIK) in their
earlier reports. In this final report they concentrated on “Accommodation
Benefits”.
The basic rules for taxing (or exempting)
accommodation benefits were covered in the ACCA F6 Study Manual in Chapter 3.
The Study Manual dealt with this in less than 3 pages, whereas OTS took a whole
chapter of 23 pages (plus appendices) to discuss this benefit; the legislation contains
lots of small print3 and HMRC’s own staff are given
substantial guidance on applying the rules4. The subject is a
lot more complex than you may have inferred from your studies.
An introductory tax course – or foundation-level
professional examination paper – can only ever give an introduction to the
fundamental rules of the tax system. They can only provide the basics to enable
a student to begin to master the details of the subject.
One of the most important things to be developed
at Year 3 of an honours degree course is an appreciation of the limits of our
knowledge. Recognising what we don’t know is often more important that we what
do actually know (or at least thing we know). This is also important in
professional life. One of the main ethical requirements of tax professionals in
the UK is that they must be ready to identify circumstances where they are not
sufficiently knowledgeable to give advice. But to be in a position to recognise
that requires a deep understanding of the discipline of taxation; the most
respected figures within the tax profession are those experts who are most
ready to seek the advice of others on matters outside their particular areas of
expertise. The same will apply no matter what profession you enter after
graduating.
One of the main purposes of the tasks set out on
the next two pages is to help you appreciate the limits of your learning and to
recognise how things can get much more complicated once we have to start
considering the fine details. Although we are asking you to look at one small
aspect of the UK tax system, similar issues apply in all other jurisdictions
and in all other disciplines. The skills involved in researching and in
explaining your findings clearly to different audiences will be relevant to
whatever profession you decide to enter.
1You can find details of the work of the OTS
on its website: https://www.gov.uk/government/organisations/office-of-tax-simplification
2The Report can be downloaded here: https://www.gov.uk/government/publications/review-of-employee-benefits-and-expenses-final-report
3Part3, Chapter 5 ITEPA2003 http://www.legislation.gov.uk/ukpga/2003/1/part/3/chapter/5
4HMC, Employment Income Manual EIM11200
onwards
Task 1 (40 Marks)
1You can find details of the work of the OTS
on its website: https://www.gov.uk/government/organisations/office-of-tax-simplification
2The Report can be downloaded here: https://www.gov.uk/government/publications/review-of-employee-benefits-and-expenses-final-report
3Part3, Chapter 5 ITEPA2003 http://www.legislation.gov.uk/ukpga/2003/1/part/3/chapter/5
4HMC, Employment Income Manual EIM11200
onwards
CREATE A SUMMARY of the
rules and practice relating to the exemption of job-related accommodation from
a charge to UK income tax.
Your Summary should be no
longer than one sheet (two sides) of A4 paper.
It should be written so
that an inexperienced colleague could use it as an aide memoire in a meeting with a new client.
The Summary does not need
to include all the answers but it does need to be sufficient to ensure that all
relevant questions are asked of the client (and irrelevant questions kept to a
minimum).
Referencing
The Summary should include
brief references to legislation, official guidance etc. These need to be just
sufficient for a user to be able quickly to check on the details of the rules.
1You can find details of the work of the OTS
on its website: https://www.gov.uk/government/organisations/office-of-tax-simplification
2The Report can be downloaded here: https://www.gov.uk/government/publications/review-of-employee-benefits-and-expenses-final-report
3Part3, Chapter 5 ITEPA2003 http://www.legislation.gov.uk/ukpga/2003/1/part/3/chapter/5
4HMC, Employment Income Manual EIM11200
onwards
You should use sources
which your colleague could readily access at their desk, for example
· Legislation (in particular, ITEPA2003)
· HMRC publications, such as Booklet 480 and the
Employment Income Manual (EIM)
· Professional tax tables (produced by publishers
such as CCH, Tolleys and Bloomsbury)
Training manuals,
textbooks and study guides are not appropriate reference material.
They rarely have sufficient detail and cannot be relied upon to reflect the
most recent changes to the law or HMRC practice. These publications are
generally written to help the user prepare for a particular exam. To do this
efficiently they have to restrict their scope to the syllabus being examined
and the rules in force at the time the exam was set, which may be a year or
more before the actual sitting.
Academic referencing
(such as "Harvard") is not required. It is unlikely to assist
the user of your document.
1You can find details of the work of the
2The Report can be downloaded here: https://www.gov.uk/government/publications/review-of-employee-benefits-and-expenses-final-report
3Part3, Chapter 5 ITEPA2003 http://www.legislation.gov.uk/ukpga/2003/1/part/3/chapter/5
4HMC, Employment Income Manual EIM11200
onwards
Additional material
If you wish, you may also
submit up to 1,000 words to explain the decisions you have made
in preparing your Summary. For example, you may have:
· been uncertain whether or not to include a
particular point,
· had to choose between two or more reference
sources, or
· used a novel way of presenting your information
(perhaps a diagram of a sort not normally seen in accounting texts)
You can explain here how you came to make your
final decision. Even if aspects of your Summary are not what the marker was
expecting to see, you will still receive full credit if you have presented a
sound argument in support of your work.
Marks
20 marks are available for the accuracy and
completeness of the technical material.
20 marks are available for the presentation and
usability of your Summary.
1You can find details of the work of the OTS
on
2The Report can be downloaded here: https://www.gov.uk/government/publications/review-of-employee-benefits-and-expenses-final-report
3Part3, Chapter 5 ITEPA2003 http://www.legislation.gov.uk/ukpga/2003/1/part/3/chapter/5
4HMC, Employment Income Manual EIM11200
onwards
Task 2 (60 marks)
In Annex C of their report5, OTS provided some
international comparisons of accommodation benefit.
OTS gave brief reports on
seven other jurisdictions
2The Report can be downloaded here: https://www.gov.uk/government/publications/review-of-employee-benefits-and-expenses-final-report
3Part3, Chapter 5 ITEPA2003 http://www.legislation.gov.uk/ukpga/2003/1/part/3/chapter/5
4HMC, Employment Income Manual EIM11200
onwards
· Australia
· France
· Italy
· New Zealand
· Ireland
· Canada
· USA
There will be many other
countries that OTS would have liked to have looked at if they had had the time
and resources. OTS recognise that the UK can learn lessons from anywhere in the
world.
This task requires you to
research the taxation of accommodation benefits in a jurisdiction that OTS have
not included in their report. You may find this exercise most beneficial if you
research a country in which you intend to live or work once you have graduated.
If you intend to live and work in the UK, choose whichever other country you
find most interesting.1You can find details of the work of the OTS
on its website: https://www.gov.uk/government/organisations/office-of-tax-simplification
2The Report can be downloaded here: https://www.gov.uk/government/publications/review-of-employee-benefits-and-expenses-final-report
3Part3, Chapter 5 ITEPA2003 http://www.legislation.gov.uk/ukpga/2003/1/part/3/chapter/5
4HMC, Employment Income Manual EIM11200
onwards
1You can find details of the work of the OTS
on its website: https://www.gov.uk/government/organisations/office-of-tax-simplification
2The Report can be downloaded here: https://www.gov.uk/government/publications/review-of-employee-benefits-and-expenses-final-report
3Part3, Chapter 5 ITEPA2003 http://www.legislation.gov.uk/ukpga/2003/1/part/3/chapter/5
4HMC, Employment Income Manual EIM11200
onwards
1. DRAFT A REPORT on the taxation of living
accommodation in your chosen jurisdiction. Use the same style as OTS have used
in Annex C of their report (25 marks)
2. DISCUSS how far the taxation of employee
benefits-in-kind in your chosen jurisdiction is consistent with Adam Smith’s
“canons of taxation” (Equity, Certainty, Convenience, Efficiency) Word limit 1,500 words for this part. (25 marks)
3. STATE which sources of tax information you would
rely on for your chosen jurisdiction, if you were acting as:
1. An employee
2. An employer
3. A tax adviser
and briefly
EXPLAIN the reason for your choices for each role. (10 marks)
1You can find details of the work of the OTS
on its website: https://www.gov.uk/government/organisations/office-of-tax-simplification
2The Report can be downloaded here: https://www.gov.uk/government/publications/review-of-employee-benefits-and-expenses-final-report
3Part3, Chapter 5 ITEPA2003 http://www.legislation.gov.uk/ukpga/2003/1/part/3/chapter/5
4HMC, Employment Income Manual EIM11200
onwards
Referencing
For this Task, follow the
style of referencing used by OTS in their report. Note in particular:
· The use of footnote and hyperlinks
· The way legislation is presented in the text.
Research Diary
1You can find details of the work of the OTS
on its website: https://www.gov.uk/government/organisations/office-of-tax-simplification
3Part3, Chapter 5 ITEPA2003 http://www.legislation.gov.uk/ukpga/2003/1/part/3/chapter/5
4HMC, Employment Income Manual EIM11200
onwards
You may submit a copy of
your research diary or journal. You may find some information difficult or
impossible to find. You will still receive credit even if your actual report is
incomplete, so long as you can demonstrate in your diary that you have searched
for the information in an appropriate way. There is no word limit for the
diary. Use whatever level of detail is most helpful to you.
1You can find details of the work of the OTS on its
website: https://www.gov.uk/government/organisations/office-of-tax-simplification
2The Report can be downloaded here: https://www.gov.uk/government/publications/review-of-employee-benefits-and-expenses-final-report
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