HMRC lost a case where a small hotel (husband and wife partnership) had a congested hotel car park and guests’ cars had to be shuffled round. The proprietors initially did it themselves as they were the only ones with driving licences, but they decided to get a staff member to do it as more economical. He was in his early twenties and it was decided that, as well as the car park shuffle, he could fetch and carry for the hotel, so the proprietors decided to pay for him to have driving lessons. They paid £480 for lessons for him (the contract was between hotel and driving school). He duly passed his test and carried out the duties. This constituted “work-related training” within ITEPA 2003 S250-251 and as such was laid out and incurred wholly and exclusively for the purposes of the trade. All this was put to HMRC, as well as a reference to HMRC’s article on the subject in the February 1997 issue of Tax Bulletin (TB27N). HMRC agreed allowable.
On a wider basis work related training expenses incurred by an employer are not covered by the wholly, exclusively and necessarily test. The test for such expenses is set out in s251, which defines “work related”:
The training can be:
any training course or other activity which is designed to impart, instil, improve or reinforce any knowledge, skills, or personal qualities which:
-are, or are likely to prove, useful to the employee when performing his/her duties, or
-will qualify or better qualify the employee to undertake the employment, or to participate in charitable or voluntary activities arising through the employment.
Clearly learning how to drive will be useful to the employee when performing his duties. It will better qualify him to undertake his employment.
Also remember, there does not need to be a direct link to the current employment. It may be that in order to get promoted you must be able to drive. As long as the employee realistically expects to have a serious opportunity of holding such an employment the training would be allowed. Language training example at EIM01230 is a useful in this respect.
s250(2) allows the costs in connection with an examination or assessment of what has been learned with the training – thereby covering the costs of the driving test as well.
The main provision is that employer must provide the training. The employer must contract with the driving school to provide the training, not simply reimburse any expenses incurred by the employee.