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J Flanagan v HMRC

In J Flanagan v HMRC (TC02161 – 9 August) an employee of a major bank purchased a house with the aid of a mortgage from his employer at a rate not available to the general public. HMRC issued a ruling that tax was due under ITEPA 2003 ss 174 and 175. The employee appealed contending that the ‘official rate’ applied by s 175 was too high. The First-tier Tribunal dismissed his appeal. Judge Geraint Jones held that ‘the appellant is caught in a situation where the amount of his benefit is calculated by reference to inflexible statutory rules’. 

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Why it matters: ITEPA 2003 provides that ‘the cash equivalent of the benefit of an employment-related loan is to be treated as earnings from an employee’s employment...

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