Small firms which allow their employees to pay for their lunch with swipe cards topped up from company funds could be breeching tax rules, one expert has warned.
Roger Williams, partner at accountancy firm Wilkins Kennedy, explains that while free or subsided meals are usually seen as a legitimate tax-free benefit, HM Revenue and Customs (HMRC) are taking an increasing interest in swipe card systems.
He said: "HMRC objection seems to be that employees are being given cash to buy food, rather than a token or simply free food itself, but the cash on the swipe card can only be used to purchase meals in the workplace, so the distinction seems a little spurious."
The HMRC views such schemes as a form of "salary sacrifice" and in a recent statement asserted that this money should be counted as earnings for the purposes of pay as you earn tax and National Insurance calculations.
If the HMRC takes successful action over the matter, employees could be liable for six years' worth of back payments, Mr Williams pointed out.
Last month, PricewaterhouseCoopers warned that company car fleets that do not meet emission targets will attract increase tax liabilities.
