It would seem unjustifiable to charge E with tax
on sums spent in the provision of a benefit to some member of E’s
family of which E knew nothing, whether or not E would have been pleased
if he had known, and no less unjustifiable if E had known but disapproved
of it, yet E appears to be taxable. |
- Section 154 does not require that the employee should receive the
exclusive benefit. Therefore, section 154 can apply when the service
benefits both R, the employer, and E, the employee. It is immaterial
that E would have spent less on the service if he had had the sole choice.
In Rendell v Went47
a company incurred expenses of £641 in the (successful) defence
of one of its directors on a charge of causing death by dangerous driving.
That sum was held to fall within chapter 10, section 154. The expense
had been incurred ‘in the provision of a benefit to’ the
director regardless of the fact that there might be good commercial
reason for the expenditure and regardless of the fact that the director,
left to himself, would have spent no more than £60 and no one
suggested that he could have received free legal aid.
- The question whether there must be some benefit to the employee is
a fine one. The courts have said that the receipt of a sum which was
a fair valuation for loss of rights is not a benefit.48
However it may well be that the director in Rendell v Went
would be chargeable because a service had been provided, even if he
had been found guilty and given the maximum sentence so that no advantage
had been gained. Similarly, where a facility is provided, it is presumably
irrelevant that the employee would rather not have the benefit. Thus
the cost of providing a seat in a party for the FA Cup Final would be
taxable to E even though he detests football and would prefer to be
at Covent Garden to attend a performance of Götterdämmerung—or
vice versa.49
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