We commented in January that it appeared that the Contributions Agency (CA) were attacking arrangements where the fees for an employee's children's schooling are paid by the employer, whether or not the employee had contracted with the school to pay those fees.
Correspondence in a taxation journal recently highlighted a situation in which a CA Inspector is challenging the non-payment of NICs where a contract for the schooling was made between the employer and the school – so on the face of it the employer is not meeting the employee's pecuniary liability. However, it should be noted that this situation involves a family company – and so would be subject to closer scrutiny by the authorities. The CA's argument seems to be the same as outlined in our last bulletin i.e. that it is the parents' obligation under the law to educate their children which cannot therefore be discharged by a contract between a school and the employer.
We have not heard of any official statement from the CA on this subject. In the meantime we hope that this approach is not to be adopted in relation to employees who are not family members in a family company.