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Companies face a blitz on benefits

03 February 2006

Hospitality companies will be in the firing line again this year as the taxman targets staff benefits in kind.

HM Revenue & Customs (HMRC) is focusing on staff benefits in a bid to clamp down on operators breaking the law.

Peter Davies, of accountant and business advisory firm Vantis, warned that hospitality companies could be committing offences unwittingly.

"Often what HMRC and employers classify as benefits in kind is very disparate. We have been expecting this for some time and would advise companies to review their current set-up," he said.

Areas to consider include staff uniforms, late-night taxi fares and food and drink. Fines will be levied per employee and could be considerable.

Davies added: "The industry has been a target for some time with troncs and Operation Gourmet.

"This is another step in the revenue's attempts to bring the industry into line and one that we feel will be quite successful."

Useful tips

Uniforms

However unlikely, staff clothing can be classified as available for private use. This makes them a benefit, and if you launder them, that's a benefit too. Something as simple as a discreet company logo on them or keeping the uniforms at the premises will protect you against the taxman.

Late-night taxis

Operators can avoid tax on up to 60 journeys per year only if they are after 9pm and the employee is required to work later than usual. No public transport being available and/or it would be unreasonable to expect the employee to use it are also acceptable reasons.

Food and drink

Meals must be consumed when the premises are closed or taken in a separate room away from customers to qualify as tax-free.

By Chris Druce

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