The taxpayer, an employee of HBOS, obtained a ‘mortgage account’ of £140,000, which comprised two products: a loan of £105,000 on commercial terms and available to the general public, and a staff loan of £35,000 at a favourable rate of interest.
HM Revenue & Customs (HMRC) treated both of the lender’s products as a single staff loan of £140,000 in calculating the benefit-in-kind charge on a beneficial loan. The taxpayer appealed, on the basis that HMRC’s calculation was incorrect because the loan of £105,000 was at a commercial rate.
HMRC argued that the taxpayer’s loan was the amount £35,000 and £105,000 taken together, and was not therefore on the same terms and conditions as other commercially available loans available to non-employees. Accordingly, the exemption from a beneficial loan charge in ITEPA 2003, s 176 (which provides an exception for
