Commentary

A6.953 Company vehicles and employee vehicles

Administration and compliance

A6.953 Company vehicles and employee vehicles

A6.953 Company vehicles and employee vehicles

Company cars

Employers should be familiar with the calculation of car and fuel benefits, in particular the need to obtain the following details from the supplier:

  1.  

    •     list price

  2.  

    •     cost of added accessories, and

  3.  

    •     CO2 emissions

A key danger area is the provision of private fuel. Over the past few years many employees have opted out of company car fuel arrangements. However, rather than 'give up' their fuel card or credit card, they make good the cost of the private fuel using HMRC Advisory Fuel Rates. The provision of just one mile of private fuel gives rise to a fuel benefit charge1 for the whole year (or the period the car was provided if less than a complete tax year). Mistakes include:

  1.  

    •     incomplete or poor mileage records

  2.  

    •     home to permanent workplace being treated as business mileage

  3.  

    •     maintaining private mileage records rather than business mileage records, and

  4.  

    •     incorrect interpretation of the definition of a temporary workplace2

Example

An employee who is liable to tax at 40% has had a company car and company fuel card since 6 April 2012. Each month he submits mileage records and makes good the cost of private fuel. He keeps a record of private miles, but does not have a record of business miles travelled. The car has a CO2% of 20%.

HMRC is not satisfied that there has been no private use and considers tax and National Insurance to be due. Tax is due from the employer

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