Benefit in kind should not apply on payments of professional subscriptions by employers on behalf of employees provided certain established and long standing conditions are fulfilled.

The normal Schedule E rules provide for a deduction for expenditure incurred wholly exclusively and necessarily in the performance of the duties of the employment. This deduction can apply in relation to professional subscriptions. Even though there was a restatement of their practice, Revenue’s approach to the administration of professional subscriptions when properly tax deductible as outside the scope of BIK has not changed.

There are three conditions to be met to allow a BIK exempt treatment where an employer pays a professional subscription on behalf of an employee, namely:

• The duties of the employee require them to be a member of a professional body, and
• The employee exercises those duties, and
• Membership of the professional body is an indispensable condition of the tenure of the employment.

If there is a legal requirement for membership of a professional body, or if there is a requirement for a practising certificate or licence, subscriptions may also be paid to a professional body for an employee without a BIK charge.

This Revenue interpretation continues to apply, and has not changed with the update to the Revenue Tax and Duty Manual last month.

Any concerns regarding the BIK status of a professional subscription to Chartered Accountants Ireland will not usually be on the grounds of “wholly” or “exclusively”, but on the grounds of “necessarily” being paid. It is important to be able to show that our membership is an indispensable condition of the tenure of employment if claiming the BIK exempt treatment. Members in business should be particularly mindful of this requirement.

For members in practice, an important indicator of Chartered Accountants Ireland membership subscription being a necessary condition for tenure of employment is the statutory requirement in order to be heard at the Tax Appeals Commission.

However, care must be taken in any situation where two or more subscriptions paid on behalf of one individual to different professional bodies are all currently treated as if exempt from BIK. It seems such an arrangement would almost certainly be challenged by Revenue in the context of a Revenue audit or other Revenue intervention, if it appeared that only one of the subscriptions could be regarded as necessary.

You are recommended to review the new wording in the Revenue Tax and Duty Manual towards ensuring full compliance with the Schedule E rules and BIK treatment. From the Institute’s own analysis of the legislation and practice, and following discussions with Revenue, we do not believe that the restatement will alter the current position for the vast majority of Chartered Accountant Ireland members when claiming tax relief for professional subscriptions paid to the Institute.