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M Najib & Sons v HMRC

In M Najib & Sons v HMRC [2017] UKFTT 147 (1 February 2017) the FTT found that payments of a business allowance and of private insurance premiums were earnings for NIC purposes – despite having been reimbursed.

During a compliance check of the appellant’s records HMRC found that it had paid a mileage allowance to its two directors without a mileage log to identify the business mileage the directors had undertaken. Additionally the appellant had paid the premiums for the directors’ private health insurance but these payments had not been debited to the directors’ loan account (DLA). HMRC took the view that both these payments constituted earnings so that Class 1 NICs should have been paid.

The FTT noted that the payments would constitute ‘earnings’ (SSCBA 1992 s 3) if they had been made to the directors or for their benefit. The appellant submitted...

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