Benefit in Kind

[pamurph]

Hi All,

I am hoping someone can enlighten me on BIK. I think my company are just trying to avoid paying for something and coming up with an excuse that they hope I cannot argue against.

For the four years the company has recalled a selection of its overseas seconded staff for a business development meeting in September of each year and paid for the flights. We do not have a typical secondment agreement - there is no provision for flights home at all, but I knew that when I signed up. The policy is that those attending the meeting can have a business class flight or this can be converted to economy tickets for the person and family (up to the cost of the business class flight).

This year I (and my family) had planned to go home anyway (we have been in S Africa for three years now and not been home yet). However, at the start of the year I was told I would most likely be invited to the meeting. Therefore we decided to travel at the time of the meeting instead of earlier in the summer. I booked the flights and subsequently was officially invited to the meeting. However, they are now telling me that they cannot pay for my family's flights as that would be benefit in kind - even though they are paying for the families of 4 other travelling from SA.

I think they are annoyed that I booked early (even though the flights were cheaper then) and not through work but through an airline website (again cheaper than thru work) and so dont want to pay up as a result. My point is that I would not have travelled at that time by choice (I only did so because of the meeting). I am travelling on work business, the company policy is they will pay for family up to a business class ticket and I have the receipts to prove I paid for it. I cannot therefore see how this could be BIK.

Any advice would be appreciated. I dont think I will be able to change their minds but I want to make the point that this is wrong and I am being treated unfairly.

Thanks
Pa

 

[vandriver]

I'm reminded of one of my dad's favourite sayings :'Nobody loves a smart This post will be deleted if not edited to remove bad language'

 

[huskerdu]

AFAIK, the Revenue do not consider that a company paying for flights for the family members of employees to be legitimate expenses. Company policy is not the overriding factor here.

You say that for the other families that are travelling, that their flights are being booked through the company travel booking system and being paid directly by the company.
It sounds like they are hiding this from the Revenue by booking a business class flight as a legitimate business expense and turning a blind eye tyo the fact that it was changed to 4 economy tickets.

In the case where you booked the flights yourself and asking for direct re-embursement, your company will be audited by accountants on behalf of Revenue and will have to explain how this was a legitimate business expense when it clearly isn't. That is the problem they have.

 

[T McGibney]

your company will be audited by accountants on behalf of Revenue

Just as an aside, accountants' statutory audits of companies are conducted on behalf of shareholders, not Revenue. Revenue audits are an entirely separate & different exercise.

Otherwise @huskerdu's points are 100% correct.

 

[orka]

the company policy is they will pay for family up to a business class ticket and I have the receipts to prove I paid for it. I cannot therefore see how this could be BIK.

Of course it's BIK. Your family are not required to travel so their travel is not a legitimate business expense. Just because the company would pay for a business class ticket for you, doesn't mean that you are permitted to 'spend' this value elsewhere. It would be like saying 'instead of 5k on a business class ticket, can I spend 1k on an economy ticket and have the other 4k as tax-free salary'. It doesn't work that way - if an expense is not a legitimate expense, there'll be BIK.

It sounds like they are hiding this from the Revenue by booking a business class flight as a legitimate business expense and turning a blind eye tyo the fact that it was changed to 4 economy tickets.

And yes, it sounds like this is what the company is doing - but it is not correct. They could be storing up BIK liability for their staff by doing this.

 

[mandelbrot]

They could be storing up BIK liability for their staff by doing this.

Generally in the case of normal employees (as opposed to proprietary directors), unless there's reason to believe the employee was knowingly complicit in the failure to operate PAYE/PRSI, Revenue would be seeking to recover any amount due from the employer.

 

[ashambles]

Remember the FAS scandal where Roddy Molloy got into trouble for swapping a first class ticket into two business class tickets. The problem was the first class ticket - I don't think the BIK angle ever raised its head - and surely some revenue employees were following the story.

So it happens everywhere - well for companies whose lucky employees don't travel economy class.

I'd be fairly certain there are companies who've confirmed with revenue that there isn't a problem - as long as it's done by the employee splitting the ticket.

It's the airlines who're creating this loophole anyway. Business class ticket prices are very expensive, they need trickery like this so that companies will agree to pay.