No such thing as a free lunch?

[minstrel]

I understand the 24 month rule when it comes to claiming travel to a client site i.e. as soon as you become aware that you are going to be there more than 24 months you must stop claiming travel.

However, when it comes to claiming lunches does this rule also apply? A previous accountant advised me that the provision of lunches to an employee (me) by an employer (my ltd co) was exempt from tax and the 24 month rule did not apply.

Workplace meals
317 Subsidised meals

(1) No liability to income tax arises in respect of the provision for an employee by the employer of free or subsidised meals if-

(a) they are provided in a canteen where meals are provided for the employer's employees generally or generally to those at a particular location, or
(b) they are provided on the employer's business premises and conditions A to C are met.
(2) Condition A is that the meals are provided on a reasonable scale.

(3) Condition B is that all the employer's employees or all of them at a particular location may obtain one or both of the following-

(a) a free or subsidised meal, or
(b) a free or subsidised meal voucher or token.
(4) Condition C is that if the meals are provided in the restaurant or dining room of a hotel or a catering or similar business at a time when meals are being served to the public-

(a) part of the restaurant or dining room is designated for the use of employees only, and
(b) the meals are taken in that part.
(5) In this section "free or subsidised meal voucher or token" means a voucher, ticket, pass or other document or token which-

(a) is intended to enable a person to obtain a meal, and
(b) is provided to the employee free of charge or for less than the cost of the meals to be obtained by it.
(6) In this section "meals" includes light refreshments.

Source: Income Tax (Earnings and Pensions) Act 2003
http://www.hmso.gov.uk/acts/acts2003/30001-ag.htm#317

I realise this Act is 3 years out of date, so it might have been superseded, but at first sight it would appear that provision of lunches is not taxable. In my permie days I worked for a Big 5 and they provided free lunches without me paying any additional tax (although maybe they did a deal with Hector and paid it on my behalf).

What does the panel think?

[oraclesmith]

How exactly does your company providing lunch on a client site meet the requirements of section 1 ?

[minstrel]

How exactly does your company providing lunch on a client site meet the requirements of section 1 ?

(a) they are provided in a canteen where meals are provided for the employer's employees generally or generally to those at a particular location

The client site canteen is a canteen (it doesn't say the employer must own the canteen).

I am the only employee of the company therefore the meal is "provided for the employer's employees generally".

Doesn't that meet the criteria?

[oraclesmith]

[xoggoth]

Don't laugh OS. Really not sure as I can't be bothered to read it, but the main thing, as I have discovered on a previous occasion, is that tax inspectors often don't understand this stuff either. If the amount involved is not large you can sometimes quote this sort of thing at them and they'll concur rather than go away and spend hours checking it out.

[oraclesmith]

I'm sorry, I couldn't help it.


This may be of some assistance. It's pretty clear about the canteen situation.

http://www.grant-thornton.co.uk/page...yer%20meals%22

[ASB]

The client site canteen is a canteen (it doesn't say the employer must own the canteen).

I am the only employee of the company therefore the meal is "provided for the employer's employees generally".

Doesn't that meet the criteria?

Nice try. Unfortunatly they are not your premises either. This probably stymies it.

[meridian]

Looking at the legislation quoted, I would say that:
Under "(a) they are provided in a canteen where meals are provided for the employer's employees generally or generally to those at a particular location", if you are at the client's location then the meals are arguably not provided "for the employer's employees". They are probably provided for the Client's employees and contractors. Yes, you are partaking in the meals, but they are not provided specifically to you because you are an employee of YourCo, they are provided because of your relationship with your Client.

Under "(b)", however, the three heads of argument are that
A the costs are reasonable
B they are provided to all employees at a certain location, and
C relates to hotel premises.

As either (a) or (b) need apply, it would appear that if YourCo provides lunch to you that is reasonably costed, is available to all of YourCo's employees at that location, and is not provided in a public house or restaurant, the costs would be tax deductible.

IANAA...

[minstrel]

Thanks for the responses guys. I think the legislation is open to interpretation.

I reckon I'll interpret it in the most tax beneficial way and have the debate with the tax man if he queries it.

[oraclesmith]

Under "(b)", however, the three heads of argument are that
A the costs are reasonable
B they are provided to all employees at a certain location, and
C relates to hotel premises.

As either (a) or (b) need apply, it would appear that if YourCo provides lunch to you that is reasonably costed, is available to all of YourCo's employees at that location, and is not provided in a public house or restaurant, the costs would be tax deductible.

Er... no.... If you read this passage carefully you will see that condition A, B and C ONLY apply if the meal is being provided on the employers own premises. eg.

"or .... (b) they are provided on the employer's business premises and conditions A to C are met. "

If you are self-employed then your business premises are your registered office or your home office or rented office, if different. It most certainly is not your client's premises. If you claim this benefit, you will almost certainly be caught inside IR35, in my opinion, which could cost you more than a couple of sandwiches. If you worked at home, you could probably provide yourself with a working lunch tax free, but it would be pushing it.