company car

[futie]

Hi all,

I don't use my car very much but when I do use it (perhaps twice a week) i'll be driving to/from a client site. Not very many miles at all. Occasionally i'll use it for the school run or maybe once a month at the weekend. I work from home most of the time.

So, I was thinking - surely this is best being a company asset? I can sell it to my company and put everything through the books - maintenance, fuel, etc. And on the off-chance that I want to use it privately, I thought the company could simply charge a hire fee.

Spoke to my accountant and he put me right off the idea. Key phrase for BIK calculations is "made available" for private use, apparently. This would mean i'd be paying co. car tax and i'd be better off with it as a private car and the usual 40p mileage expenses.

Is he right to dissuade me under these circumstances? I can't help but think it's ridiculous for such a vague phrase to determine these sorts of things.

[Eric Mc]

Tax legislation is deliberately vague at times.

Your accountant is absolutely correct. The fact that the car is "available" for private useage (even though it may be only used privately relatively infrequently) is enough to trigger the full BIK charge.

[futie]

www.hmrc.gov.uk/cars/company-cars- said:

What if I only use the car for work journeys? If the only journeys you are permitted to make in the car are work journeys – for example, making calls to customers – there is no tax charge unless you actually use it for other, private purposes as well. How can I show there is no other private use? Your employer must be able to show to HM Revenue & Customs that you don’t have to pay tax. This means you could be asked to • keep mileage records • sign an agreement about the use of the car • have use of the car put into a contract of employment.

In my case, it would be easy to keep mileage records and sign an agreement about the use of the car as well as add in clauses to my contract of employment. However, would this permit me to hire the car on occasion?

[Eric Mc]

But you could NEVER use the car for home to work journeys (as the normal "commute" is a private journey) and the car would have to be kept at the employer's prremises overnight - in other words, a genuine "pool" car.

[futie]

I run my own company from home, so there is no commute. And the car is kept at the registered premises of the company (my home).

[Eric Mc]

That's it then. It is ALWAYS available.

[futie]

Eric Mc said:

That's it then. It is ALWAYS available.

There are some interesting quotes from here on the subject, one is:

EIM23050 - Car benefit: meaning of made available
Section 114(1) ITEPA 2003
Car benefit can only apply when the car is “made available”. This requires a decision by someone (normally, but not necessarily, the employer) having control of the car to do so.

It also requires that the decision is conveyed to the employee - a decision not conveyed to the employee is worthless because, so far as they are aware, they cannot use the car.

also:

EIM23081 - Car benefit: meaning of available
Section 114(1) ITEPA 2003
The fact that a car may be available to an employee is not sufficient in itself to establish car benefit. The car must first have been made available to that employee; see EIM23050.

The word available is not defined in the legislation. Accordingly we apply its ordinary dictionary meaning of at one's disposal or capable of being used. The Oxford English Dictionary includes this as its definition of the word’s current meaning:

“that may be availed of. Capable of being employed with advantage or turned to account; hence, capable of being made use of, at one’s disposal, within one’s reach.”

I'm not convinced yet that this isn't something I can do. Of course in the end it's my decision, but the more people agree with me, the better i'll feel! btw, thanks for the advice so far, Eric - much appreciated.

[Eric Mc]

As I said, deliberately unclear.

When you are the director of your own company, the Revenue on the whole are much less sympathetic to such claims compared to if you were an ordinary employee.

As all these things are now of a "Self Assessment" nature, you can more or less claim what you want for years, until the day a PAYE inspector visits or the company accounts are listed for an enquiry. Then they tell you that you have been handling something incorrectly for "X" number of years and they chase you for the missing tax/PAYE/NIC and interest.