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

As a matter of law, it is possible for reasonable estimates of expenditure to be reimbursed, without any statutory dispensation. A reimbursement is deductible under section 338 ITEPA if it is possible to prove by evidence on the balance of probabilities that a reasonable estimate of the amount has been made. HMRC’s benchmark rates demonstrate what a reasonable estimate would be, so if they are followed, the absence of a dispensation is irrelevant.

The statutory basis permitting HMRC to grant dispensations under section 65 ITEPA cannot authorise what would otherwise be impermissible deductions. It follows that the position described at (1) must be the basis for HMRC issuing the scale rates and granting dispensations.