EAPA statement on tax
Dated: 08/03/2009
EAPA statement on the taxable treatment of EAPs
6th March 2009
Dear Members
The recent revised guidelines for the guidance of local tax inspectors has been developed in conjunction with HMRC to address the issue of how legal and financial information can be delivered within an EAP if the EAP is to remain exempt.
The Executive are pleased with the outcome of this as it now clarifies further a point that has been an issue for the industry for many years.
Although the main purpose of our consultation with HMRC was to get greater clarity for local tax inspectors concerning Legal and Financial information provision, the point concerning dependants was highlighted when confirming the wording associated with Legal and Financial information provision. However, it is worth emphasising that nothing in this area has changed and the legislation concerning dependants remains as it has always been.
It is worth emphasising again, these guidelines are for local tax inspectors guidance and each local inspector is encouraged to make a common sense judgement on this area and we would refer providers to the introductory note headed Full Text where it says;
"It follows that if there are some services provided under an EAP which clearly satisfy the terms of the exemption and others that clearly do not, it makes sense for the two sets of services to be separated - .........However, if it is not possible to separate the services in this way, common sense should be applied where the welfare counselling provided by an employer consists substantially of facilities that satisfy the term of the exemption....."
Although the issue of dependants remains a "grey area" as there are some circumstances dependants are allowed (such as couples counselling) nothing has changed regarding this area and with reference to the extract above there is scope for providers to have a constructive discussion with their local tax inspectors, and that of their customers, in the unlikely event that the issue of dependants get's raised at a local level.
Should any provider be faced with an issue concerning dependants the executive encourage them to highlight the extract from the guidelines above to the local tax office concerned. If following this there are still issues then please refer to the EAPA UK Executive who will try and assist in getting greater clarification on behalf of the industry as a whole.
Yours sincerely
EAPA Executive
