Festive Revenue taxes turkeys

A COMPANY boss was forced to pay £6,000 tax on turkeys he gave his staff for Christmas. The Inland Revenue told Martin Weeks the birds were a 'benefit in kind' and were thus subject to taxation.

For the past 23 years Weeks has given out turkeys as a festive perk at his engineering firm in Andover, Hampshire. But after a routine Revenue inspection, he was sent a demand for unpaid tax dating back to 1997.

'We buy the 15lb turkeys for about £20 each from a local farm and like thousands of other firms give them as a simple gesture of goodwill along with the staff's Christmas bonus payment,' Weeks, 49, said.

'The Inland Revenue spent two days here poring over our accounts and came out with this finding that we should be taxed on our Christmas turkeys.

'We were told that we have to pay up to £17 per turkey depending on what tax bracket the employee is in. It is ridiculous, an absolute joke.

'The accounts have always been spotless and done in the same way. They gave me no reason why the turkeys hadn't been spotted or taxed before. I can only assume it was down to an eagle-eyed - or turkeyeyed - inspector who is a bit of a jobsworth.'

As much as £17 in tax was charged per turkey because the Revenue typically multiplies the value of gifts by 1.66. It then demands up to 40% of that figure and imposes an extra charge for National Insurance.

Weeks paid up but said the tax grab was an insult to Mitutoyo, the company he founded and where he is now a director. The firm has 115 employees, a turnover of £30m and further operations in Warwick, Halifax and East Kilbride.

Weeks added: 'I sent a memo to staff saying that unfortunately we had not budgeted for this so the turkeys would have to stop this year. I also said that if they still want something to stuff they might consider stuffing the Labour Party at the next General Election.'

The back tax should have been paid by the workers but Weeks said he felt it was unfair to ask them to do so. An Inland Revenue spokesman said guidelines issued in November - after Weeks paid up - held that turkeys were too 'trivial' to be taxed.

The guidance says: ' When employees are supplied with a small or insignificant benefit Inland Revenue staff should exercise judgment and decide whether it is reasonable to regard the benefit as trivial in nature.

'For instance, a seasonal gift by an employer to its employees at Christmas of a turkey, a box of chocolates or a bottle of wine should be regarded as trivial regardless of the number of employees concerned and the overall cost to the employer.'

Sources said the 'over-zealous' official who sent the demand to Weeks had later been overruled by his bosses. It is not clear, however, whether Weeks will get his money back.

The potential threat to the tradition of giving turkeys to staff at Christmas was condemned by business leaders. Stephen Alambritis, of the Federation of Small Businesses, said: 'This is preposterous and grossly unfair. It seems the taxman is increasingly desperate to squeeze out every penny he can to pay for schools, hospitals and roads.

'When a firm has to pay a huge tax bill it hasn't accounted for, it is a real bombshell to them and in some cases could have drastic implications for their survival.'

George Osborne, Conservative Treasury spokesman, said: 'This is a shabby way to treat people who want to spread a little cheer at Christmas. How mean can the Inland Revenue get?

'It's typical behaviour from a bah humbug Government which specialises in relentlessly squeezing every last penny out of hard-pressed taxpayers.

'In Gordon Brown's Britain, Bob Cratchit would have had to pay tax on Tiny Tim's goose because it was a gift from Scrooge. Charles Dickens must be turning in his grave.'