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HMRC internal manual

Employment Income Manual

HM Revenue & Customs
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The benefits code: more on apportionment of the cash equivalent of the benefit: Westcott v Bryan

Section 204 ITEPA 2003

There is no statutory guidance on how to do a “proper apportionment” (Section 204 ITEPA 2003).

Westcott v Bryan (45TC476)

The only judicial guidance is in Westcott v Bryan. That case was concerned with legislation which preceded the current rules and the facts of the case are a little difficult to follow, but the general principles set out by the judges apply to “proper apportionment”. The following principles emerge from the case:

  • where there is use of something, both by an employer for their own purposes and as a benefit by a director, there should be an apportionment,
  • there are no fixed rules or precise formulae about how to do the apportionment,
  • the apportionment must be based on the facts of the case, and lead to a result which is fair and reasonable.

Lord Justice Sachs commented (page 493) on the calculation of the apportionment:

“such an apportionment must …… necessarily be on a rough and ready basis. One must, of course, be on strict guard to avoid abuses such as by provision of benefits merely in reality adding to the remuneration of a director; but to my mind no precise formula can as a rule be applied”.