The Government should legislate to clarify the position on the provision of food and drink by employers to their employees, the Law Society of Ireland has argued in its pre-budget submission.
The organisation, which represents more than 12,000 solicitors across the country, suggests anomalies have arisen with regard to Revenue polices in regard to food and drink, in part because of changes to the way employers are operating in the wake of the pandemic.
In a submission that also calls for changes to the rules around tax assessments, it contends “the current tax treatment of the provision of food and drink to employees and directors is not appropriate for modern working practices”.
As things stand, it says, companies are permitted to provide free or subsidised meals to staff without these being regarded as a taxable Benefit in Kind as long as they are provided in a canteen or similar setting and are available to all employees.
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These restrictions, the Law Society says, have become outdated post-Covid as the increased incidence of flexible and remote working makes it less practical to make such benefits available to all staff.
It also argues this evolution of work practices has necessitated a changed pattern of meetings between management and individual or groups of employees as well as team meetings of various types and sizes.
“This is an important part of the modern working environment,” it says. “These are occasions when employees are obliged to meet with their manager etc, to discuss matters and should not in any way be viewed as a benefit.”
The submission argues, “It would be useful to clarify this position.
“The Law Society is of the view that from a policy perspective, section 118 (of the Taxes Consolidation Act 1997) should be amended to clarify that expenses incurred in connection with the provision of food and drink to employees and directors in their role as such shall not be regarded as a taxable benefit for the purposes of section 118(1).”
The society also raises concerns in relation to Revenue’s guidance on the buying of meals for employees in recognition, for example, of their performance at work.
It suggests that even where the sums of money are relatively small, such purchases are regarded as a benefit for the purposes of the small benefit exemption.
This, it says, has potential implications for both employers and employees, with the former required to meet enhanced reporting requirements while for the latter the meal would count as one of their five annual tax-free benefits.
“The Law Society is of the view that from a policy perspective, the Department of Finance should amend section 112B (of the TCA) to provide that for the avoidance of any doubt, the expenses incurred in or in connection with the provision of food and drink to employees and directors in a restaurant, bar or other hospitality setting shall not be regarded as a tangible benefit for the purposes of section 112B TCA.”
