ACC3140 Task 2 Analysis of article

Guidance

Your report should have the following chapter headings:

Chapter 1 Introduction

Set out the scope of the assignment

Chapter 2 Summary of content

Summarise the content of the article in your own words. Typical phrases to use include:

The author asserts that….

The author explains that….

In the author’s opinion….

The author states that “………”….

An example given by the author is ….

In his conclusion, the author…..

Chapter 3 Statutory references

Identify one statutory reference. Give some background information about its context (e.g.
which Act, and which Chapter within the Act). Explain it in your own words. Give a flavour of
the commentary in Chiltern’s guide.

Chapter 4 Case law

Summarise one of the cases mentioned in the article. The summary should contain sufficient
detail to demonstrate that you have read the full transcript of the case. The best source for
judgments is Lexis.

This chapter should contain a number of sub-headings such as ‘Background facts’, ‘Issues’
and ‘Decision’.

Selective quotations should be used to give a flavour of the decision.

Use Tolley’s Tax Cases to give a brief introduction to the case.

Chapter 5 HMRC resources

Search HMRC’s website (www.hmrc.gov.uk) and obtain details of HMRC’s interpretation of

any aspect covered in the article. On the home page click on ‘Tax Agents and Advisers’ to
obtain access to HMRC manuals.
Chapter 6 Conclusion

In the context of additional information discovered during your research, give your opinion as
to the quality, relevance and accessibility of the article. This chapter should include phrases
like:

In our opinion, the author…..

We consider that ….

Our overall conclusion is that……

References

You should identify all sources used to compile the report.

Task 2 Coursework example (extracts)

Chapter 1 Introduction

This report is written by Ria Shah, Wendy Thompson and Alfred to satisfy the coursework
requirements of ACC3140. It comprises the following chapters:

Chapter 1 Summary of Article

We have chosen an article published in Tax Adviser. It deals with withholding tax. Ray
Chidell is……..

We chose this article because it recommends the key points on ways to improve the
withholding tax procedures and it is this report that EC reflected.

…….

Chapter 1 is a summary of this article in our own words.

Chapter 2 Statutory reference

Chidell mentions a number of sections in his article. We have chosen section 250 ITEPA
2003 which we will summarise in our own words.

Chapter 3 Case law

The article contains numerous references to case law. We will describe HMRC v Decadt
[2007] BTC 586 which deals with ………..

Chapter 4 HMRC Material

We searched HMRC’s website and discovered a number of references to training and

education ……….. We have chosen to summarise …………

Chapter 6 Conclusion

In this Chapter we give our opinion of the readability and relevance of the article as well as
our comments on what we learned from this assignment.
Chapter 2 Summary of Article

Introduction

In this Chapter we……..

The author starts with a quotation and explains how words such as ‘necessarily’ have been
interpreted by the courts. He mentions an early case that illustrates the point but takes the
view that more recent cases dealing with training costs highlight the lack of natural justice.

The author gives three practical examples of expenses. In the first two, the employer incurs
the expense whereas in the third, the taxpayer who is a qualified doctor incurs the expense
herself.

The main point is that if the employer funds the training, there is not tax liability whereas an
employee who incurs the expense herself will not get tax relief.

Training paid for by the employer

The author then focuses on the rules for employer-funded tainting, quoting extensively from
HMRC’s guidance. He emphasises that the concept of ‘work-related’ training is very wide
and that it does not matter whether the training is delivered internally or externally.

Employees paying for their own training

When it comes to employees paying their own cost, the author draws out a clear distinction
that it will only be allowable if it is “wholly and exclusively and necessarily in the performance
of the duties of the employment”. (ITEPA 2003, s336.)

Decided cases
The author then moves on to discuss the Consultant Psychiatrist case and quotes
extensively from the Commissioners’ decisions. He also refers to the case of HMRC v
Decadt which we will be summarising in Chapter 3

Tax planning

The practical consequences of the decisions are covered. The author states that in the
Consultant Psychiatrist case “there was an easy solution if the employer had been aware of
it…..” The solution proposed by the author is a salary sacrifice arrangement and he gives a
simple numerical example to illustrate his point.

Conclusion

The author briefly considers whether his proposals would be provocative to HMRC but
readily concludes that they would not. He draws attention to HMRC’s advice which we will
summarise in Chapter 3.

Ray Chidell’s overall conclusion is “If employers are unable or unwilling to fund training
costs, a salary sacrifice arrangement should invariably be considered.”
Chapter 2 Statutory reference

Background

In his article, Chidell refers to s.250 ITEPA 2003.

This section is in Part 4, Chapter 4 of the Act. Part 4 deals with employment income
exemptions, while Chapter 4 deals specifically with education and training.

Summary of the section

Section 250 essentially states that there is no liability to income tax on the provision of work-
related training by an employer or the reimbursement of work-related costs to the employee

Subsection (2) defines the costs as those “incidental to the employee undertaking the
training” and includes examination fees.

There is a definition of work-related training in s.251. There are exceptions in s.252 to 253.

Comments in Tolley’s Yellow/Orange Tax Handbook [or CCH Red/Green Book]

The explanatory notes to the Act state that it derived from s.200B and s.200D of ICTA 1988.
The notes also mention that the section reflects HMRC practice in that it applies “whether it
is provided by the employer or a third party.”

Other material

Chiltern’s Guide to the Yellow Book states that……

Chapter 3 Case Law

We have chosen the case of HMRC v Decadt which is mentioned by Chidell in his article.

Background facts

Mr Decadt was a doctor……

He claimed a deduction for examination fees……

HMRC refused to allow the deduction…..

Mr Decadt appealed to the General Commissioners.........

Arguments for HMRC

Arguments for Mr Decadt

Commissioners’ Decision

The Commissioners allowed the appeal. HMRC appealed to the High Court

Deicsion

Patten J allowed HMRC’s appeal.

…..

Patten J said “the fact that the training is undergone as a term of the contract is not of itself
enough”
Chapter 4 HMRC Manual

The article contained a reference to EIM 01220 with is HMRC’s Employment Income
Manual.

It is interesting that HMRC consider that the exemption covers a wide range of courses:

“A wide range of practical and/or theoretical skills will qualify for exemption so long as the
skills are relevant to the employee. Where leadership and team skills are appropriate to the
employee, participation in activities such as Outward Bound, Raleigh International, or
Prince's Trust will qualify. Work related first aid and health and safety courses will also
qualify.”

(EIM 01220)

We also discovered that the exemption applies to National Insurance contributions as well as
income tax.

....................................

Chapter 5 Conclusion

Overall we found Chidell’s article to be……..

It was relatively easy to find HMRC’s views on the subject ………

References

1. ITEPA 2003

http://www.opsi.gov.uk/acts/acts2003/pdf/ukpga_20030001_en.pdf

2. Explanatory notes to ITEPA 2003

http://www.opsi.gov.uk/acts/acts2003/en/ukpgaen_20030001_en.pdf

3. HMRC manuals

http://www.hmrc.gov.uk/manuals/eimanual/EIM01220.htm

http://www.hmrc.gov.uk/manuals/nimmanual/NIM02393.htm

4. Berg Kaprow Lewis

http://www.bkl.co.uk/printable/training_costs__getting_it_right_for_tax_162.htm