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What is the tax position when employees take company vehicles home?Business Community Home > Finance and Tax Forum > Business Expenses Forum |
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| Original Message Added : 3 Sep 2012 - (Edited : 3 Sep 2012) This is a question we frequently get asked. Quite simply, in order to satisfy HM Revenue & Customs the car is a pool car, it needs to be available to more than 1 employee and is usually left at the companies address over night and not normally kept at or near the homes of employee’s for more than 60% of the year. The vehicle must not be used by one employee to the exclusion of all other employee’s. HMRC would accept that the employee taking the car home and having some use over the weekend, is in actual fact incidental to the main journey to be completed on the following Monday, as such this would not need to be declared to HMRC.
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| Reply : 4 Sep 2012 We also get asked by new contractors whether to bring in their car into the business or simply claim mileage allowance. Also whether they can claim car repirs or not and why not? |
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| Reply : 5 Sep 2012 In response to your question, there are more contractors considering buying company cars through their contracting limited companies, especially with the low carbon emmissions of some vehicles, however it is really down to the contractors personal circumstances as to whether a company car is right for them, they also need to look at the life of the vehicle, which is typically 3 years but a number of our clients have been extending this to 5 years and this appears to be becoming a standard. If you want some advice on this, please visit us at http://www.payrollservicescompany.co.uk/contact-us/ and drop us an email or use the contact us link through freeindex. We don't charge to give advice. |
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| Reply : 6 Sep 2012 I have worked for HMRC. Common sense is a good guideline. If you use the car on Friday then it can happen that the car stays with the employee for the weekend. Also some private use of the car is normally ignored, so long it isn't significant. The best way to ensure that you aren't going too far is to check the guidelines by HMRC. And if you overstep them then HMRC will make some reductions on what you can claim. Normally you get a warning for the first time. It really depends on your attitude to them and the seriousness of the offence. For Mileage allowance repairs aren't allowed because they are already taken in account in what you can claim per mile. HMRC doesn't allow you to claim things double. Yours truly, Ahsan Pijlman Business 4 Accountant |
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| Reply : 6 Sep 2012 Unfortunately common sense does not apply with HMRC. I used to work for a firm of Bookkeepers/Accountants. A client wanted to wind up his business, so de-registered from VAT as he no longer had any sales, selling most of the equipment prior to his deregistering. He then sold his tractor to another farmer with no VAT. Following an inspection, the inspector made him reregister for VAT, issue a VAT only invoice to the other farmer who was also VAT registered and then deregister again. The other farmer, simply claimed the VAT back on his return. To this day, I have never been able to understand the logic behind this, which is why I tell all clients to follow the rules. It is my job to protect my clients from fines and penalties from HMRC and as long as I would love to be able to tell them to take a common sense approach, I can't as that can land them with a hefty fine if they make the wrong choice. By following the rules, there is never any come back on my clients, either in my role as an accountant, or now with HPS. I do agree with you that common sense should apply, but your common sense may not be the same as someone elses. The rules and reg's are the same for everyone. Jon |
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