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Where Taxpayers and Advisers Meet
The Trials and Travails of Job-Related Expenses: Doctors, Nurses and Care Workers Claiming for the Cost of PPE During the Pandemic
23/09/2020, by Lee Sharpe, Tax Articles - PAYE and Payroll Taxes, National Insurance, NICs
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HMRC says doctors, nurses and carers having to buy their own PPE CANNOT claim tax relief. Lee Sharpe of TaxationWeb says claiming job-related expenses is like threading a needle while wearing Level 3 PPE – in the dark. And that’s exactly how HMRC wants it. But is it right?

Politick Ye Not

Mark will not permit me to say anything overly (or even overtly) political so I am not allowed, for example, to opine on why the government might have been so keen to shunt 20,000+ older people back into care homes (and – purely coincidentally, of course – out of the spotlight of overflowing NHS primary care provision) without wanting to test them first, such that a wave of infection in care homes was practically guaranteed, despite the government’s frenetic denials of the bleeding obvious.

Suffice it to say that, next time the government threatens to throw a protective ring around something, it may well be worth just checking whom (or what) exactly that ring is supposed to be protecting. The answer mightn’t surprise, but it might yet disappoint.

Not all Heroes and Heroines

It is my understanding that, while the vast majority of us stayed home to save lives and to protect the NHS, a substantial percentage of those in the care sector deliberately stayed away from their own homes, choosing instead to quarantine themselves in care homes and similar, the better to look after their patients and clients while still protecting the wider community. A good number of 2020’s heroes and heroines may not have been wearing capes or even masks, but that’s only because they were forced to make do with bin liners and scraps of old t-shirt; I am not sure this is what Edna Mode had in mind.

PPE, Jim - But Only if YOU Pay for It

It has also been widely reported that frontline medical and care staff were able to secure real PPE in some cases, but only by paying for it themselves. And this is where the fun starts, because HMRC’s advice on this is as follows:

“Personal Protective Equipment (PPE)

If your employees are working in a situation where the risk of coronavirus transmission is very high, and your risk assessment shows that PPE is required, then you must provide this PPE to your employees free of charge. Any PPE you provide must fit properly. The provision of PPE to your employees is non-taxable.

If your employee requires PPE to carry out their role and you are unable to provide this, you must reimburse the actual expenses of employees who purchase PPE themselves. This is non-taxable and employees cannot claim tax relief on these expenses from HMRC.” (emphasis added)

Putting to one side HMRC’s foray into advising employers on their health and safety obligations, how can this be right? What happens if the employer and the employee disagree over what level/items of PPE are actually required?

The short answer is that HMRC’s position on this – that employees cannot claim tax relief on paying for PPE for their own use, even in the middle of a pandemic – is arguably correct. Unhelpfully, HMRC has not explained exactly why it thinks an employee cannot get tax relief. The easy answer is that the legislation that enables an employee to claim tax relief for expenses such as these is so abstruse as to make it all but impossible to make a successful claim, in almost all cases. It may surprise non-tax people that pinning down something as ‘obvious’ as the deductibility of the cost of specialist clothing is so equivocal. Hopefully, this article will explain why, and why it is also reasonable to argue that HMRC Is wrong.

General Expenses Rule – Threading the Needle

The legislation that ostensibly permits an employee to claim Income Tax relief for employment-related expenditure is at ITEPA 2003 s 336:

“336: Deductions for Expenses: The General Rule

  1. The general rule is that a deduction from earnings is allowed for an amount if—

(a)the employee is obliged to incur and pay it as holder of the employment, and

(b)the amount is incurred wholly, exclusively and necessarily in the performance of the duties of the employment.

 …                                                       “

This might seem straight forward enough but, as many advisers will be painfully aware, the legal interpretation of the phrase “necessarily in the performance of the duties of the employment” has confounded innumerable would-be claimants. For instance:

  • If you are a  newspaper journalist, and your employer actually requires you to keep up to date with current events, then you might reasonably expect to be able to claim for the cost of buying relevant newspapers or journals. But you’d be wrong, because the courts have decided that the duties of a newspaper journalist are to write articles, and reading up on current events merely puts you in a position to fulfil your duties, not actually perform them; (Fitzpatrick);
  • If you are a pilot and your employer requires you to pay for your training for certification for a particular aeroplane, that you flew as part of the duties of your employment, then you might think that was an allowable expense. But you’d be wrong, because the Special Commissioners determined that a pilot’s duties are flying a ‘plane, and type-training merely puts you in a position to be able consequently to perform those duties; (Hinsley);
  • If you are a consultant psychiatrist and retaining your professional qualification (which you need in order to do your job) requires you to undertake ongoing training or development, you might be disappointed (but perhaps not surprised by now) to find that the Special Commissioners accept that the training might well have been incurred “wholly, exclusively and necessarily” for the purposes of the employment in general terms, but not in the performance of the duties of the employment – counselling patients; (Consultant Psychiatrist; likewise Snowdon);

Thus do the courts refer to employees’ efforts to claim tax relief for expenses as “notoriously difficult”, or akin to “threading a needle” (Banerjee – see below).

False Hope

Bearing in mind that s336 is supposed to set out the basis on which an employee might make a valid claim for tax relief, It might reasonably be said that the courts have historically struggled to see how.

Even HMRC acknowledges that s336 is supposed to be a relieving provision – at EIM31637, it says:

“Because the general rule for employees’ expenses is extremely restrictive it is tempting to conclude that no expense could ever be deductible. However, the rule is intended to permit some deductions. We must apply the rule strictly but fairly to ensure that deductions are permitted where they are due.”

Unfortunately, when pushed to give examples of when deductions might actually be due, HMRC kind of struggles. EIM32545 gives two positive examples:

“Example 1

A scientist is employed by a University department to carry out basic research in polymer chemistry. As part of her continuing research, she pays to attend a presentation at a different university of the findings of a scientist working in the same field. She is required to attend such presentations as part of the programme of research for which she is employed. The subject matter of the presentation directly influences the content and direction of her own research.

The duties of this employment include research. In this case attendance at the presentation is an integral part of the research process and so is one of the duties of the employment. The costs of attending the presentation are deductible.

Example 2

A trainee doctor employed as a registrar on a training contract is required, as a stated contractual duty of the employment, to attend various external training courses. As part of the duties of the employment there is a mandatory requirement to maintain a national training number by attending a series of training courses and events. Failure to complete the course and obtain the qualification will mean that he cannot proceed to the next stage of his chosen profession.

Attendance at the training events is an intrinsic part of the employment and one of the duties of the employment. The costs of travel to the events, course fees and other associated costs met by the employee are deductible.”

While the first example met with some approval in another case before the Commissioners, (Consultant Psychiatrist), its utility outside of employed researchers who are contractually obliged to attend related research presentations by other universities at their own expense, is difficult to gauge.

The second example might seem to offer more hope, more generally, to more employees: it follows the real-life case of HMRC v Dr. Banerjee [2010] EWCA Civ. 843. Critically, this was a training contract such that the Commissioners and ultimately the Court of Appeal were (largely) satisfied that the duties of this particular employment oriented around training, so Dr. Banerjee was actually performing the duties of her employment when she incurred the obligation to pay for her training costs, rather than the training merely putting her in a position the better to perform the duties of her employment. HMRC had wrongly assumed that Dr. Banerjee’s duties oriented solely around the treatment of patients. (I say “largely” because one CoA judge dissented on the basis of a perceived –significant – personal benefit deriving from Dr. Banerjee’s personal training expenditure).

To twist a phrase, normal service has since been resumed, however, as per Example 3:

Example 3

A trainee accountant is employed by a company to maintain business records and do the book keeping of its accounts. As part of his contract of employment, the trainee is required to attend training courses and successfully pass a set of exams in order to become a qualified accountant for the company. The trainee fails some of his exams, and must privately pay to resit those exams in order to continue his employment.

The trainee’s duties of employment include acting as a bookkeeper for the business. Therefore he is not on a training contract where training is an intrinsic contractual duty of the employment. The training costs incurred are not incurred in the performance of duties of employment, and are therefore not allowed as a deduction.”

This follows the earlier case of Perrin v Revenue & Customs [2008] UKSPC SPC00671. Although it is difficult to distinguish the cases behind (2) and (3) – even after you’ve read the transcripts – Perrin’s duties were perhaps deemed to orient around the activities for which he was rewarded, rather than what he was obliged to do more generally in the course of his employment. This may well prove problematic for the majority of private sector employees – even those on training contracts as you or I might recognise them.

If you were in any doubt as to how keen HMRC is to limit the damage wrought by Example 2 / Banerjee to its otherwise near-perfect track record of denying tax relief for employee expenses of any substance, note:

  • HMRC fought Banerjee all the way from the General Commissioners’ and lost at every turn
  • At EIM32530, HMRC acknowledges Banerjee as an aside but argues that an employee’s payment for  Continuing Professional Education will in most cases derive a personal benefit that is not incidental, so that the payment cannot be wholly / exclusively incurred (for the performance of the duties of the employment) and will not secure tax relief
  • HMRC has taken a rather cute position as regards Examples 2 and 3 above, implying in (3) that merely by having duties that include non-training activities such as acting as a book-keeper, Perrin was not on a qualifying training contract, while glossing over in (2) that the doctor’s paid duties also included ostensibly non-training activities, such as attending patients. (Alternatively, I would struggle to see why Dr. Banerjee’s attendance on patients might qualify as training but a trainee accountant’s book-keeping efforts could not).

Tax Inspectors?

Strangely, the one occupation that springs to my mind as eminently capable of navigating the eye of the s336 needle is that of Tax Inspector.  So far as I am aware, HMRC officers still engage in business observations and test purchases, so the duties of their employment might well include paying for the odd haircut, takeaway or beauty treatment while staking out a business (but presumably not paying for calculators, given the observing officers’ numerous numerical ‘misadventures’ in Angel Beauty Parlour Ltd [2019] UKFTT 0247 (TC)).

Such activities would clearly fall within the scope of officers’ duties where they are being employed to undertake such work. Assuming there to be no private benefit or other purpose to the expenditure, it would seem quite eligible.

In reality, whether or not such expenditure would be eligible for tax relief by way of deduction is moot, since it is a near-certainty that officers will be getting their expenses reimbursed as a matter of course, rather than having to claim tax relief on the outlay.

What of Nurses, Doctors and Care Workers?

Having spent some time appreciating / reminding ourselves of just how difficult it is to claim tax relief for employee expenses on basic principles, back to the matter at hand, which is medical workers having to pay for their own Personal Protective Equipment (PPE) largely because of a shortage of available PPE though normal channels – the employer.

Readers may well be aware that employees in certain roles are able to claim for the cost of their uniforms, etc. – typically referred to as a “uniform allowance” or “laundry allowance”. But the scope of the relief goes much further than mere cleaning and in fact it covers maintenance and replacement thereof.

HMRC accepts that the cost of clothing of “a special character dictated by the occupation as a matter of physical necessity” may be allowable for an employee – this derives from comments in Hillyer v Leeke (51TC 90), which in turn referenced Caillebotte v Quinn (50 TC 222), which was actually a self-employed case but covered similar ground – see also EIM32465.

I think we can safely say that PPE would fall within the scope of “clothing of a special character”, etc.

I don’t think it can be argued that such clothing merely puts the employee in a position to perform the duties of their employment, insofar as the need to clean, maintain or replace the PPE arises specifically from – and while – carrying out those duties.

Nor should we be particularly concerned as to whether or not the employee benefits personally from wearing the PPE – i.e., a duality of purpose that could mean the expenditure was not incurred wholly, exclusively and necessarily in the performance of the duties of the employment. All protective clothing protects the wearer. The point is whether or not the specific requirements of the role make the protective clothing necessary, generally for employees in that role. And in the case of PPE in particular, it could be argued that replacing the PPE so often during the working day is referable to the duty of care towards patients – i.e., the prevention of cross-infection, rather than for the benefit of the care workers themselves.

If we assume that HMRC actually wants to give tax relief when it is rightly due, I am almost out of reasons why HMRC thinks it cannot do the right thing for front line workers who are out of pocket.

Catch 22: HMRC’s Ace in the Hole?

I suspect HMRC’s last line of defence may be deduced from its venture into health and safety advice to employers – namely: “If your employee requires PPE to carry out their role and you are unable to provide this, you must reimburse the actual expenses of employees who purchase PPE themselves.”

In other words, the employee has not really borne any cost because it will ultimately be reimbursed by the employer under its legal obligations.

The Hellerian nightmare would be if HMRC were to argue that the PPE was ‘obligatory’ in terms of the employment only if and to the extent that the employer had a statutory obligation to provide it, and if so, then the employee could not be “obliged to incur and pay the expense as a holder of the employment”.

To put it another way, "you can get tax relief on necessary PPE but only if it’s so necessary that the employer is supposed to provide it for you, but you cannot get tax relief on your PPE costs – no matter how practically necessary they were – because the employer was supposed to provide it for you (or pay you back for it)".

I am not convinced that this is necessarily a safe conclusion, and I would argue that the employee’s obligation arises from the nature of the work but a lack of provision, and operates independently of a health and safety assessment undertaken by their employer. After all, it’s not as if HMRC blithely allows the employer tax relief for a proposed expense just because that employer has a statutory duty to pay it: HMRC is rather more interested in what the employer – or indeed any business – actually pays for.

I am assuming that HMRC accepts that, where the employer actually does provide PPE to the employee, it is not taxable on the employee as a benefit in kind on the employee by virtue of ITEPA 2003 s 316 – “accommodation, supplies and services used in [performing the duties of] the employment”. It would be most helpful to know.

I suppose it could be argued that the employee has laid out the expenditure on the employee’s behalf – as per EIM01110:

“Businesses are often run in such a way that employees make payments on their employer’s behalf. For example an employee may buy stamps for the employer and be paid from petty cash. This transaction is outside the scope of ITEPA 2003 ss 62 and 72: the employee has received no money of his own on which we could make such a charge.”

Tax practitioners will appreciate the irony of HMRC’s relying on that blink-and-you-missed-it paragraph for its own ends (a slightly embellished version also appears in the P11D booklet 480 at 5.20).

It might be arguable in some scenarios where the employer has made such arrangements with its employees. But I suspect that in very many cases, frontline workers will have acted independently of their employer and instead relied on guidance from their own professional bodies, etc., on whether (and what) PPE is needed, based on the relevant circumstances.

Difference of Opinion?

And here may lie the rub: if memory serves, ‘official’ Public Health England (PHE) guidance on the level(s) of PPE required in various care and treatment scenarios has changed over the course of the SARS-CoV-2 pandemic. Moreover, the professional bodies do not always agree with official guidance (for example, the British Medical Association currently asserts that applying chest compressions as part of CPR counts as an “aerosol-generating procedure” and to follow the guidance for wearing PPE as set out by the Resuscitation Council UK; PHE had previously downgraded it).

On its website, the BMA currently says:

Using Your Own PPE

Your employer must provide you with a safe working environment and with appropriate PPE for the area in which you are working.  

For the level of PPE you need in different clinical settings, please see the [details] above.   

You should not have to purchase your own PPE. However, if there is no alternative, you may decide to buy and wear the correct level of PPE for the area you are working in. You should not face criticism or more serious action if you do this.”

It seems quite plausible that, as the pandemic progressed, there may have been doubt or disagreement over the level of PPE required – or whether any PPE was required at all. That difference may linger even now. At some point, we may be permitted to reflect on whether official guidance might have been different, if the UK had been rolling in all manner of PPE that it could happily provide to all frontline staff who might need it (and that was up to code, and was not well past its use-by date).

  • So what happens if an employer disagrees with the employee as to the level of PPE required, or that any was required at all? The employer is hardly likely to reimburse the employee if it can find a reason not to pay.
  • Likewise, the employer will not be keen to reimburse the employee if doing so could be interpreted as an admission of error in its past official PPE policy
  • What if PHE guidance said one thing, and the employee’s professional body (or similar) said a different level of PPE was required?
  • What if the employer does provide appropriate PPE, but not enough for several changes a day, leaving the employee obliged to secure additional sets in order to avoid cross-contaminating his or her patients?
  • What if the employee worked for agencies at the time, or has since left the relevant employment?

An employee would always prefer to be reimbursed. That way, they get all of their money back, (tax-free), rather than a tax rebate at, say, 20% or 40%. But the rules for general expenses mean that an employee gets some measure of tax relief if the employer either cannot or will not provide the relevant items, or reimburse the employee for their cost if the employee pays for them personally.

World-Beating Deaths

We have been promised rather a lot of world-beating stuff in the last few months, which failed to survive more than momentary contact with reality. Perhaps the one area in which the UK can genuinely claim to have been world-beating was in terms of health and social worker deaths – at least according to Amnesty International’s July 2020 report Exposed, Silenced, Attacked: Failures to Protect Health and Essential Workers During the Pandemic. We apparently came second only to Russia, but that appears in turn to be because Amnesty International counted only the deaths in England and Wales, and did not include the figures for Scotland in its totals for the UK.

We may not know how many of those deaths are attributable to a lack of adequate PPE and we may never know. But we can infer that operating as a medical or care worker carries serious risks. And the discussion of which should be the correct type of PPE to wear is not just a matter of mild academic interest.

I suspect that HMRC’s reticence (in terms of explaining itself, if nothing else) may well stem at least partly from a desire not to get drawn into what represented appropriate PPE at the time. But HMRC has been here before. In fact, HMRC used to come here quite often.

Flat Rate Expenses

I referred above to uniform and laundry allowances. HMRC generally refers to these as Flat Rate Expenses, and the mechanism is set out at ITEPA 2003 s 367:

“367: Fixed Sum Deductions for Repairing and Maintaining Work Equipment

  1. A deduction is allowed for the sum, if any, fixed by the Treasury as in their opinion representing the average annual expenses incurred by employees of the class to which the employee belongs in respect of the repair and maintenance of work equipment.
  2. The Treasury may only fix such a sum for a class of employees if they are satisfied that—
    1. the employees are generally responsible for the whole or part of the expense of repairing and maintaining the work equipment, and
    2. the expenses for which they are generally responsible would be deductible from the employees' earnings under section 336 if paid by them.
  3. No deduction is allowed under this section if the employer pays or reimburses the expenses in respect of which the sum is fixed or would do so if requested.
  4. If the employer pays or reimburses part of those expenses or would do so if requested, the amount of the deduction is reduced by the amount which is or would be paid or reimbursed.
  5. In this section “work equipment” means tools or special clothing.
  6. This section needs to be read with section 330(2) (prevention of double deductions).”

The Treasury delegates the role to HMRC to negotiate with trade unions and determine a fixed annual amount of tax relief that eligible employees can claim. The flat rate amounts are intended to represent the average annual expense incurred by that class of employees on the repair and replacement of work equipment. This means the repair, maintenance and replacement of loose tools and special clothing (EIM32705). 

In practice, HMRC liaises with trade unions (and similar bodies) in order to determine at a national level what is deductible “on average”, and not the employer. That is because HMRC wants to know what the duties require, rather than what the employer or employee says is necessary.

While a flat rate expense cannot be claimed if the employer provides the relevant items, facilities or reimburses their cost, HMRC seems to recognise that there can be practical limitations to such conditions at EIM67230, which discusses where the employer has provided laundry facilities but they are inadequate so nurses have to pay for laundry themselves:


In these cases it may be argued that the employer is not providing a usable laundry facility.

No deduction should be permitted in these cases. You should [however] permit a deduction only where:

  • there is an instruction that laundry facilities are to be denied to employees and that instruction is enforced, or
  • the laundry capacity is so inadequate that employees are actually and consistently prevented from putting in uniforms for laundering, not merely that they could be prevented if at some point the laundry capacity was to be exceeded.”(Emphasis added).

I wonder if one might be able to see a parallel here between the given launderette scenario and one where an employer is supposed to provide PPE but does not, or cannot. Note that the example ignores whether the employer is in breach of its contractual obligations, focusing instead on the facts on the ground.

Hard Yards

I suspect that many readers familiar with the taxation of employment will think me a fool for taking a punt at one of HMRC’s most treasured restrictions masquerading as reliefs, particularly with only half the story – and doubly so, for thinking it could be done through Flat Rate Expenses regime and ITEPA 2003 s 367. But I am not suggesting that the relief is available through the Flat Rate Expense mechanism itself. After all, s 367 is only a formally-recognised template: a checklist for the mass application of s 336 – the original general expenses rule theoretically available to any employee, which was covered at the beginning of the article.

I am tempted to suggest (in the absence of any useful information) that the test of whether or not employees will get tax relief for their personal PPE costs is down to whether or not HMRC (or the courts) can be convinced of the breadth and depth of the gap between what employers have actually provided or reimbursed, and what employees have justifiably had to pay for.

The background to s 367 may be of interest: HMRC used to negotiate these national expenses agreements adapting s 336 principles on a concessionary basis through its care and management powers. Those powers still exist, although HMRC’s discretion to use them as a force for good are somewhat blunted, thanks to Wilkinson. They may nevertheless be applied to remedy temporary and/or minor anomalies, and I think that helping employees who perforce remain out of pocket for their own PPE during a pandemic must be a prime candidate (ADML3400).

Lives were at stake, and lives have been lost. We are on the cusp of a second wave. Frontline workers have endured significant personal hardships and many of them do not earn substantial sums. Deciding to fund their own PPE personally will not have been a casual matter, and may not have been a trivial expense. It could be argued that the tax regime should operate fairly and even-handedly, regardless of perceived ‘worthiness’. I should absolutely agree that this would be ideal, but we are not in an ideal world and some iniquities are too obnoxious to ignore. And it could be argued that there is already precedent for judicial interpretation of tax treatment in terms of perceived public ‘good’ (McKnight v Sheppard [1999] 71 TC 419; CIR v Alexander von Glehn Ltd [1920] 12 TC 232).

Oh, and while writing, I note that it is has been a long time since nurses’ and medical workers’ Flat Rate Expenses were updated (see EIM67200 – EIM67250 and EIM 66700 – EIM66795). £18 for a year’s worth of regulation shoes and tights..?

About The Author

Lee is TaxationWeb's Articles & News Editor and writes for TaxationWeb. He is a Chartered Tax Adviser with experience of advising individuals and owner-managed businesses over a broad spectrum of tax matters.
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