Company Car ?

I presume that you have never had an audit as a controlling employee.

It is not uncommon for the IR to assess some personal use and apportion this type of expense

This probably isn't work the bother of checking, so unless you are stupid and admit it you will get away with it.

Either one or the other of the above applies.

Try this one:

If you run an establishment that serves food and you take home the waste food instead of throwing it away, what does the Inspector expect you to do?

Nothing.

tim

"Jim Ley" wrote

You mean enforcing the *INactivity* - I'm talking about cases where there isn't any private use.

Tim wrote

His wife has it most days to get to her part time job, shopping, collecting the kids, etc.

I have for years.

Why not?

It seems you have a seriously brain dead concept of how very many people have to work nowadays.

When I phoned the UK service depot for my central heating boiler (which was less than 2 miles away) to arrange a warranty service visist. I said "I'll put the kettle on for the service engineer" they said we don't work like that. The service engineer had to visit a lot of customers that week, some over 210 miles away, and he saw us an the way back, 3 days later. :-(

For your information my company car doesn't spend it's time "parked up outside (my) house each day".

For me 2,000 to 3,000 miles per month has been the norm for 30 years.

My company car (that was) , was always an estate car or an MPV, was, (it's now private), totally full of tools, circuit diagrams, and spare parts (including all the rear passenger seats). Was totally dedicated to business use.

My wife has always had to have a well equipped small car of her own bought from new. She needed it because I was away all week in the company car, so she needed a car of her own and it had to be reliable. We use it to go shopping in at weekends because it is easier to park,

That makes it quite unappealing to unload the company car when I get back on Friday night Ca 9 pm at the end of a day which usually involves 3 hours on a customers site 200-300 miles plus 8-9 hours of

*very shitty* driving, then having to load it back up on Sunday night for an early departure on Monday morning.

Next monday I will set out from Leeds at 05-45 am to be certain to arrive in Leicester by 08-15 to get a space in the customer's (Glenfield Hospital's) car park, otherwise I'm shafted.

Just by way of another example, on 23 rd January 2006 I have to be on site in Torquay, (a 560.4 mile return trip), at 08-15 on a Monday morning.

I can't see any reasonable justification for the IR sticking a personal taxation charge of Ca £4.7k/year on me for this. Especially on a 4 year old 80,000 ++ miles car, worth, wait for it, about £4k total.

There is, I believe a general requirement in law for proportionality in the collection of taxes according to the HMRC website.

DG

Saving money is not the only way you can benefit. Having the car there is a kind of insurance policy for when you might unexpectedly need it.

It has the monetary value you might expect to pay for insurance cover which would provide you with a car instantly in the event that you might need one.

Come off it, it undoubtedly has a value. The only problems are (1) that the assessed value is unrealistic and is unfairly biased against the non- and low user while favouring the high user, and (2) the potential difficulty of proving that you have rejected the availability.

No, but it has calmed your fears of what-if scenarios which could only be avoided by having the car available. If you say that availability is worthless unless actual use is made, you might as well say that insurance is worthless if you never make a claim. We don't buy insurance because we expect to make claims, we buy it

*in case* we have to. We clearly think that insurance is beneficial and worth having because we pay good money for it.

I was talking abot the cost to the employee, not the company. Cheap mortgage deals are in any case a pure BIK, there is not normally any business reason to provide them. Providing company cars is a different matter. Although they can be pure BIKs, mostly they are primarily provided for business use and any private benefit is just incidental - the company would tend to cost the expense on the basis of the business benefit to it, and any additional wear and tear through private use would be made good by the employee paying mileage rates for private use.

In an interview a few weeks ago the rep from TV Licencing showed a similar attitude. Basically she said that: Because we think we know how many TVs there are in the country, it is perfectly reasonable for us to contact anyone who does not own a TV and begin by calling them a criminal and telling them that they WILL be fined and they WILL have the bailiffs round etc etc. and to keep on at them until they get a licence. (and possibly a TV too, although that is less important)

Tunnel vision - because "I" cannot live without Eastenders - nobody else can. Because "I" use my car for this - everybody else does

"Ronald Raygun" wrote

The employee doesn't pay anything for the availability of the company car. So presumably you must be talking about the cost of making an alternative private car available, if the company car wasn't available? Yes?

But the point is, the employee who *never* uses the company car (eg because it's full of business tools/samples etc) and already has their own private car which they use instead for all private use, would *not* spend anything on making a further car available, if the company car weren't there. Because they don't want to use another car - just like they don't use the company car for any private use!

"Ronald Raygun" wrote

Exactly. Even more reason why the availability of the cheap mortgage should be taxed at least as much as the availability of the company car!

"Private BIK available, NO tax (when not used)." "Business asset available, TAXED! (even when not used)."

How fair is that?

"Gordon" wrote

Don't be silly. I am talking here about a company car that is *not* used privately. Didn't you notice my last sentence above - "... which they only use for work purposes" ?

Next, "tim \(moved to sweden\)" will probably say that anyone taking cash in their business *must* be taking some "under-the-counter" - to evade taxes - so should be taxed on a multiple (greater than 1.00) of their declared income...

With that attitude, would it be any wonder that people would do it?!

[Eg if HMRC always added 25% to declared income, then every "Honest Joe" would naturally subtract 20% of their true income knowing that HMRC would add this back, and then they'd be taxed on the true amount. :-( ]

But if the car wasn't actually used, (here there are 3 other cars on the drive) nobody would want to pay much more than a days car hire, say 40 quid, as an annual premium for that benefit. Myself not as much as that. The IR wanted to reduce my allowances by £4,700.

And anyway you can't rely on having "a car instantly in the event that you might need one". In general a company car is not available for private trips if it's needed on business. The business gets first call on the use of the car.

The value of a company car which is not used for private journeys is not zero, but I would say it is balanced out by the cost to the user of stabling it overnight, and the responsibility for looking after it. My concrete block drive cost 2 -3 thousand pounds, and now needs cleaning because of oild stains.

It would be just as valid to get a quote from a garage for stabling the car overnight as it was to get a quote from an insurance company for insurance to cover making a car available to cover emergencies.

DG

"Derek ^" wrote

Yes, I thought that too.

Yes he does. He pays income tax on the deemed value of the benefit of availability.

Of course, I fully agree. Except, mind you, that if the employee's private car is parked at home, while he himself is at work with the company car, and a private need suddenly arises (such as, say, wife taken to hospital with a broken leg from falling off a ladder while washing windows, and so he has to go to pick up junior from school), how's he going to deal with this without making private use of the company car?

You're not comparing equivalent availabilities. It would be comparable only if the mortgage deal were actually given, to the extent that the employee then had carte blanche to draw up to a specified limit for any purpose and with no questions asked. Arguably that sort of arrangement does constitute a benefit. It's why I've kept my flexible BTL mortgage account open with a token balance even though I could have paid it off. The benefit of having virtually instant access to £65k without going through a new application is worthwhile to me, even though I have no plans at present of making use of the facility.

Whether that benefit should be taxable, if made available through the good offices of an employer, is another question of course, and then there's the thorny issue of how it should be valued.

That the method of assessing the value of availability of a company car is unfair is indisputable. But that it is a benefit is too.

In what way is that relevant to the question of whether priavte use availability is a benefit?

AISI stabling the company car at a garage which is conveniently near (and also conveniently far away from) the employee's house would merely be a line of defence to an IR allegation of actual private use for commuting, if the car is otherwise stabled in the immediate vicinity of the employee's home.

In any case, physical presence is not sufficient evidence for private use availability. Nor is physical absence sufficient evidence for lack thereof.

IIRC they do with people who receive tips as part of their job, for example waitresses, they assume you get a certain amount of tips and tax against that. Anyone know if thats correct?

"Ronald Raygun" wrote

In the sense that you need to look at the whole picture:-

If the company car sitting outside your house is a benefit, then it is also a responsibility - you need to look after it & store it ("stabling").

If your employer were to charge you for the car (and not charging you is what gives rise to a "benefit"), then you should therefore also charge your employer for looking after & storing ("stabling") the car (and thus not charging gives rise to an "expense").

"Benefit" & "Expense", neither actually being charged.

Does the one offset the other?

"Ronald Raygun" wrote

Eh? Are you saying that when considering whether the 'car availability' is a benefit, and hence should be taxed, "you have to factor in the cost of making the car available" ... which is the "income tax on the deemed value of the benefit" ??

In other words, the "reason the tax is payable" is because "the employee pays the tax"? What sort of circular argument is that?

"Ronald Raygun" wrote

What would he do if he'd taken the bus or train to work? Whatever the answer to that question is, answers your question above.

If he's taking time off work, he can drive home in the company car and pick up the private car for the private use.

"Ronald Raygun" wrote

OK, what about the company laptop computer?

That's been taken home to finish off some important work, but wouldn't be used for personal use - there's the home's desktop for that.

Should the company laptop be taxed because it is *available* for private use?

"Ronald Raygun" wrote

The same is true of the company laptop...

Compare that situation to an employee who, whilst holding a driving licence and named on the employer's insurance, is not allocated a company car and normally travels to work on foot, by pushbike or by public transport. If this employee has such a personal 'emergency' while at work they might be offered the one-time use of a company car, either a pool car or one normally used by another employee. Would you expect this employee (and all others in the same situation) to be taxed because, in come circumstances, they might have the availability of a company car for private use? How is this different from the situation in the quoted message?

No. That car availability is a taxable benefit is already a fact, it's the law. You need to factor in the tax cost of making the car available when considering whether to make it available. This is a decision the sole director of a one man company has to make when considering whether to give himself permission to use it privately. A similar decision needs to be made, or rather agreement reached, between an employer and employee in terms of whether it is in the employee's interest to accept this benefit, given that it will be taxed. In many cases this decision is a no-brainer except where heavy private use will actually be made.

Not the sort you'd expect me to make, I hope!

Not necessarily. He might ask a colleague to drive him, or even to borrow his car. To make such a request would not go down well if the guy's company car is sitting there ready and able.

He would need to take the rest of the day off, i.e. if he was planning to come back to work the same day, the trip could not qualify as business use.

You're conflating two questions. No, I don't think it should be taxed, but yes, I think it is a benefit. The same with company cars.

In terms of the law as it stands, yes, I would expect him to be taxed. No, I don't think it's right. But you need to differentiate bewteen having the availability, and having the possibility of being given availability. One could argue that the car is not normally available, is then made available for a specific occasion, and that the availability is then withdrawn again, rendering the employee liable for a 365th of the availability tax, because it was available for a period of only one day.