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If the original cost of accommodation was below £75000 and the accommodation was provided to the employee six years after the accommodation was purchased where the market value is now £100,000, wouldn’t the correct figure to use on the additional benefit calculation be the market value of £100,000?
I came across a question in a Kaplan revision book with a similar scenario to the one above and they used the original cost which was below £75000 rather than the higher market value.
Kaplan are correct in their answer as the rule to substitute in the higher OMV when the taxpayer occupies the property more than 6 years after the company acquired it ONLY applies where the original cost was itself more than £75,000. Hence if the original cost is less than £75,000 there is no expensive accommodation benefit to compute – probably very unlikely in an ACCA exam!
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