In S Kutcha v HMRC (and related appeal) (TC02769 – 5 July) a company made payments to two sons of one of its directors (K) while they were at university. HMRC issued assessments on K charging tax on the basis that the payments were taxable benefits. The First-tier Tribunal dismissed K’s appeal holding that the payments were taxable by virtue of ITEPA 2003 s 212. (The tribunal also upheld determinations charging NIC.)
Why it matters: ITEPA 2003 s 212 provides that ‘a scholarship which is provided for a member of an employee’s family or household is to be regarded ... as provided by reason of the employment’ and as a taxable benefit. The First-tier Tribunal upheld HMRC’s view that the effect of this provision was that the payments made to the director’s sons were taxable benefits.
