UT/2023/000049 - [2024] UKUT 00233 (TCC)

In 2009, HMRC introduced a system of benchmark scale rates which employers could use to make subsistence payments to employees who had incurred such expenses. Subject to various conditions, the rates could be reimbursed without a tax liability. It is necessary under that system for employers to apply for and obtain from HMRC a dispensation.

Mainpay did not apply for or obtain such a dispensation, and the determinations and decision notices which HMRC issued to Mainpay were issued for the additional reason that scale rates could not be utilised without a statutory dispensation. Before the FTT, Mainpay argued that such a dispensation was unnecessary and it was nevertheless open to Mainpay to reimburse expenses to workers using the benchmark scale rates as long as the workers had in fact incurred some expense. The FTT rejected that argument and by Ground 4 Mainpay appeals against that decision.

Given the conclusions which we have reached on Grounds 1 to 3, it is not necessary for us to address this issue, but as it was fully argued and we can set out our conclusions fairly briefly, we will do so.

We were asked by the parties to determine this issue as matter of principle, such that if we were to agree with Mainpay’s submission, our decision would relate only to reimbursements by Mainpay to workers who did in fact incur some subsistence expenses. We have proceeded on that basis, but we note that the FTT found at FTT[193] that even if they had accepted Mainpay’s argument as to the position in principle, “we do not consider that the arrangements operated by Mainpay were a genuine attempt to reimburse subsistence expenses actually incurred”. We return to this finding below.