High value company pool cars
High value company pool cars
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blindswelledrat

Original Poster:

25,257 posts

263 months

Monday 26th January 2009
quotequote all
DO these raise a lot of eyebrows at the Inland Revenue?

Obiously a pool car avoids the associated company car taxes and are a massively exonimical way of owning an expensive car (provided you are comfortable being slightly less than honest as to thier use)

I suppose my question is: Do people regularly get away with this or is it completely unfeasible for some reason?

Deva Link

26,934 posts

276 months

Monday 26th January 2009
quotequote all
Some people get away with murder.

Someone I know who is an HMRC inspector went to a company and found they had 2 MB CLK's or something on the books but no tax or NI was being paid on them. Book-keeper said there wasn't any due as they were not used by employees - they were being used by the Director's wives. rofl

They weren't very happy with the bill they got.

Maxf

8,444 posts

272 months

Monday 26th January 2009
quotequote all
Guy down the road from me was in the paper a little while ago for successfully arguing that his Diablo should be written off as a 'business necessity' or somesuch. He argued that his company needed to maintain an 'image' and the car was a tool in doing so.

Not sure I'd have the balls to try it on with the taxman to that extent though!

Eric Mc

125,884 posts

296 months

Monday 26th January 2009
quotequote all
Maxf said:
Guy down the road from me was in the paper a little while ago for successfully arguing that his Diablo should be written off as a 'business necessity' or somesuch. He argued that his company needed to maintain an 'image' and the car was a tool in doing so.

Not sure I'd have the balls to try it on with the taxman to that extent though!
ANY car can be argued that it has a business related element to it. The problem with claiming that a car is a genuine "pool" car is that the car must have ABSOLUTELY NO non-business use at all.

KingRichard

10,146 posts

263 months

Monday 26th January 2009
quotequote all
Maxf said:
Guy down the road from me was in the paper a little while ago for successfully arguing that his Diablo should be written off as a 'business necessity' or somesuch. He argued that his company needed to maintain an 'image' and the car was a tool in doing so.

Not sure I'd have the balls to try it on with the taxman to that extent though!
That is actually totally feasible, however as Eric said... you'd have a tough time NEVER using it for non-business purposes hehe

Also, surely to be a genuine pool car it would have to be insured for any driver etc? Otherwise it could add fuel to the fire of it being a personal car and a tax dodge?

If you can afford something nice, just pay the bill. If not, buy something less flash yes

No point getting unnecessary attention from the IR is there?

blindswelledrat

Original Poster:

25,257 posts

263 months

Monday 26th January 2009
quotequote all
Eric Mc said:
Maxf said:
Guy down the road from me was in the paper a little while ago for successfully arguing that his Diablo should be written off as a 'business necessity' or somesuch. He argued that his company needed to maintain an 'image' and the car was a tool in doing so.

Not sure I'd have the balls to try it on with the taxman to that extent though!
ANY car can be argued that it has a business related element to it. The problem with claiming that a car is a genuine "pool" car is that the car must have ABSOLUTELY NO non-business use at all.
BUt in the event you just sit there and nod and say "Of course it isnt used in any other respect" would there realistically be anything more they could do?
Or more precisely would do?
I really cant see them stalking a company over a couple of pool cars as I would imagine it to be a totally uneconomical way of gathering tax which I would think is thier sole criteria?.
But then again-I don't know the limits of thier determination.

Plotloss

67,280 posts

301 months

Monday 26th January 2009
quotequote all
blindswelledrat said:
Eric Mc said:
Maxf said:
Guy down the road from me was in the paper a little while ago for successfully arguing that his Diablo should be written off as a 'business necessity' or somesuch. He argued that his company needed to maintain an 'image' and the car was a tool in doing so.

Not sure I'd have the balls to try it on with the taxman to that extent though!
ANY car can be argued that it has a business related element to it. The problem with claiming that a car is a genuine "pool" car is that the car must have ABSOLUTELY NO non-business use at all.
BUt in the event you just sit there and nod and say "Of course it isnt used in any other respect" would there realistically be anything more they could do?
Or more precisely would do?
I really cant see them stalking a company over a couple of pool cars as I would imagine it to be a totally uneconomical way of gathering tax which I would think is thier sole criteria?.
But then again-I don't know the limits of thier determination.
I'd guess they'd go through the mileage claim records and tally them up with the odometer reading.

They're probably that petty.

IanMorewood

4,309 posts

279 months

Monday 26th January 2009
quotequote all
My advice, if they genuinely will be pool cars then go ahead if on the other hand one director/employee may seem to have an unusually large use of the car then stick to company car rules. And yes the revenue are picky enough to do a stake out over a couple of pool cars if they think your defrauding them.

blindswelledrat

Original Poster:

25,257 posts

263 months

Monday 26th January 2009
quotequote all
IanMorewood said:
My advice, if they genuinely will be pool cars then go ahead if on the other hand one director/employee may seem to have an unusually large use of the car then stick to company car rules. And yes the revenue are picky enough to do a stake out over a couple of pool cars if they think your defrauding them.
That pretty much answers my question.
It was only a hypothetical question really.
A company I know have two high value, high emission cars which they do an enormous amount of company miles in .
I can't really understand how or why they would do that!

Am I right in thinking you cannot have a 'pool car' if there is predominantly one person using it-even in the instance where it is genuinely pure business?

KingRichard

10,146 posts

263 months

Monday 26th January 2009
quotequote all
blindswelledrat said:
IanMorewood said:
My advice, if they genuinely will be pool cars then go ahead if on the other hand one director/employee may seem to have an unusually large use of the car then stick to company car rules. And yes the revenue are picky enough to do a stake out over a couple of pool cars if they think your defrauding them.
That pretty much answers my question.
It was only a hypothetical question really.
A company I know have two high value, high emission cars which they do an enormous amount of company miles in .
I can't really understand how or why they would do that!

Am I right in thinking you cannot have a 'pool car' if there is predominantly one person using it-even in the instance where it is genuinely pure business?
I'm sure that would be ok, it just has to be used purely for business. You could have a pool car, but only the MD uses the pool car because he has external appointments for example. Doesn't stop the car being available for the teaboy to collect milk in... but it's never been needed for such. See what I mean? Could be ok...

I wonder if you could also argue that having an office at home constitutes a commute when you go home for the evening? Meals out to the pub become business meetings etc... Obviously you couldn't take the piss, but there must be some grounds for use of pool car other than from office to meetings.

Deva Link

26,934 posts

276 months

Monday 26th January 2009
quotequote all
blindswelledrat said:
Am I right in thinking you cannot have a 'pool car' if there is predominantly one person using it-even in the instance where it is genuinely pure business?
It doesn't even have to be a "pool" car. As long as it's only used for business use and the company makes it unavailable for private use then there's no benefit in kind tax to pay. There's quite a well known case - Elm Milk Ltd - where the Revenue lost a court case on this.

blindswelledrat

Original Poster:

25,257 posts

263 months

Monday 26th January 2009
quotequote all
AM I right in thinking that under no circumstances can you take it home- even if you were going to a meeting the following day, for example?

Deva Link

26,934 posts

276 months

Monday 26th January 2009
quotequote all
blindswelledrat said:
AM I right in thinking that under no circumstances can you take it home- even if you were going to a meeting the following day, for example?
Nope - "incidental" use is OK. But you'd be on dodgy ground if you used the car to go out for the evening, although maybe you'd need to if you'd left your own car at work. Ideally, HMRC likes to see private use excluded from the insurance policy and written instructions that private use isn't allowed.

If you're honest about these things then there shouldn't be a problem. If you take the mickey then you're asking for trouble.

Edited by Deva Link on Monday 26th January 17:05

DanX5

443 posts

214 months

Monday 26th January 2009
quotequote all
Would re-iterate previous posts that pool cars must be used WHOLLY for business mileage and any private mileage as confirmed during HMRC enquiry for example can lead to a benefit in kind being assessed.

Having said this, if this it genuinely the case that the car is used 100% for business AND you have robust and valid mileage logs for pool cars then there is no reason that you can have such a company owned car without a benefit in kind being assessed. We have had several clients have PAYE inspections in recent years where records have been examined and accepted on this basis (no matter what the car). Not quite as clear cut with reclaiming the VAT back though as from memory it needs to only be 'available' for private use even if actually not used for HMRC to disallow the VAT reclaim - I vaguely remember people saying that business only use insurance could work here BUT the cost of this may in itself may prove prohibitive.

There is another famous case which from memory is vaguely relevant (although I think this relates to claiming VAT on the purchase of the car) and sticks in the mind for two reasons - one being the case name of Fagomatic and the second being the car involved which was a brand spanking new Lambo of some sort which he claimed to be a delivery vehicle for re-stocking cigarette vending machines in high end clubs!!

2 sMoKiN bArReLs

32,040 posts

266 months

Monday 26th January 2009
quotequote all
blindswelledrat said:
DO these raise a lot of eyebrows at the Inland Revenue?

Obiously a pool car avoids the associated company car taxes and are a massively exonimical way of owning an expensive car (provided you are comfortable being slightly less than honest as to thier use)

I suppose my question is: Do people regularly get away with this or is it completely unfeasible for some reason?
I know somebody that got caught playing this game. The end results were not funny.

E36GUY

5,907 posts

249 months

Tuesday 27th January 2009
quotequote all
What if said pool car was all branded up and therefore still being used for business advertising even when being used as a non-work trip?

Eric Mc

125,884 posts

296 months

Tuesday 27th January 2009
quotequote all
E36GUY said:
What if said pool car was all branded up and therefore still being used for business advertising even when being used as a non-work trip?
Useage is the key - not what it looks like.

Slurms

1,254 posts

235 months

Tuesday 27th January 2009
quotequote all
Eric Mc said:
E36GUY said:
What if said pool car was all branded up and therefore still being used for business advertising even when being used as a non-work trip?
Useage is the key - not what it looks like.
And you've got to keep very detailed records of what "business" mileage you've done as it seems the onus is on you to prove there has been no personal use of the vehicle.

skwdenyer

18,707 posts

271 months

Tuesday 27th January 2009
quotequote all
Eric Mc said:
E36GUY said:
What if said pool car was all branded up and therefore still being used for business advertising even when being used as a non-work trip?
Useage is the key - not what it looks like.
What about if the vehicle is "wrapped" (advertising all over), and an employee is required, under their contract of employment, to drive said branded vehicle for a certain number of miles per month to social functions, shopping centres, and to park said vehicle for a certain number of hours per month, and so on in order to advertise the business? Could that usage be characterised as exclusively business use?

On the subject of personal use, there is another fairly recent (last 10 years) case of a plumber (I believe) who claimed his van was a pool van. He did not have premises where he could park the van, so he drove it to a car park the other side of a river from his house, and then walked home. He didn't use the van for personal mileage otherwise.

HMRC argued that, since he was more-or-less commuting home, the van was being used for personal use. The commissioners found in his favour, however, since the van was not parked at the home address, was not used for non-business use, and was available for anybody in the company to drive (even though there was only one person in the company). So there is preceedent here.

Oh, one last thought. If the employee (genuinely) works from home, I believe parking the car at home should be OK, so long as mileage logs show only business use.

Eric Mc

125,884 posts

296 months

Tuesday 27th January 2009
quotequote all
The Revenue do have a different view on the useage of vans compared to cars. In more recent years, the gap in the approach taken in respect of cars and vans has widened further.

In essence, I would not take a "van" case as precedence for a "car" situation.