»Ê¹ÚÌåÓýapp

One of the conditions for the benefits charge is that the individual receives a benefit (INTM601480). However, ‘benefit� is not defined for the purpose of this charge, although prior to April 2007 it was said to include ‘a payment of any kind�.

If the individual is, apart from the benefits charge, otherwise chargeable to income tax on the amount or value of the benefit, then the benefits charge cannot apply ITA07/S731.

Before 6 April 2017, there was no guidance within the legislation on what the ‘amount or value� of a benefit was for the purpose of calculating the amount of a benefits charge.

With effect from 6 April 2017, Finance (No.2) Act 2017 inserted sections ITA07/S742B-742E. »Ê¹ÚÌåÓýappse sections provide rules around the valuation of certain benefits provided by way of

• a payment by way of a loan,
• making movable property available, and
• making land available.

INTM601580 considers what is a ‘benefitâ€� and INTM601600 considers what the amount or value of a benefit is for the purpose of the benefits charge. »Ê¹ÚÌåÓýapp changes addressing the valuation of certain benefits from 6 April 2017 are discussed from INTM603620 onwards.

»Ê¹ÚÌåÓýappre must be an individual who receives a benefit. More is said about the individual at INTM601680. No charge can arise under these provisions because an individual may at some future date become entitled to receive a benefit. It may be the case that an individual receives a benefit even though nothing has, at first glance, been received directly. Whether a benefit is received is a question of fact.

Examples of an indirect benefit are where a debt of the individual is settled by the person abroad, or alternatively where the person abroad settles expenses on the individual’s behalf. This is typically seen where the trustees of a trust pay a child’s school fees on behalf of the individual or pay the individual’s rent. In more sophisticated arrangements, benefits may be disguised or provided by circuitous routes to conceal the fact.

»Ê¹ÚÌåÓýappre are several areas of tax legislation where the receipt of a benefit can result in a tax charge, for example employment income legislation and certain capital gains provisions (like defining a ‘capital paymentâ€� in TCGA92/S97 mentioned at INTM601520). Where a benefit is received it will be appropriate to have regard to any other provisions that may result in a tax charge from the receipt of such a benefit.

For example, where a benefit is provided by a foreign company, it may be appropriate to consider whether the individual can be regarded as a ‘shadow director� of that company, and as a result chargeable to income tax under employment income rules in respect of any benefit received.

»Ê¹ÚÌåÓýappre is no direct correlation between what is a benefit for one purpose with what may be a benefit for the purpose of the benefits charge. However, it is likely that where a benefit would be considered to arise for one purpose, unless it is by specific legislation deeming a benefit to arise for that purpose, similar circumstances would also give rise to a benefit for the purpose of the benefits charge.