Company Car / Pool Car status


Company Car / Pool Car status

Postby Derek 0161 on Sat Jun 06, 2009 6:45 pm

We have two company vehicles that are freely available to several employees, however they are sometimes parked at an employees house overnight as they are "on call". Our accountant was aware of this.

The tax inspector visited the company and noticed that the vehicles had been filled up with fuel near employee adresses. As a consequence the tax inspector has advised us that they should be classed as company vehicles and not "pool cars".

He has said he will provide a report on some recommendations, if we don't agree with the report he has warned he will go right back into the companies history (i.e. he has warned us to agree or else).

We were taken by surprise by this and always try to behave properly.

Is this aggressive behaviour normal?

What is likely to happen now?

Should our accountant have attended the inspection?

Any replies gratefully received.
Derek 0161
 
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Re: Company Car / Pool Car status

Postby Lambs on Sat Jun 06, 2009 7:19 pm

D,

Some Inspectors are 'assertive', others are not.

Frequently, PAYE inspections are not attended by the taxpayer's agent. It depends on the circumstances. It is (all too) often the case, particularly with PAYE, that the agent is not notified. Even if the agent is aware, either from HM Revenue & Customs directly or through you, then the agent may not always attend. For instance with my firm, we offer to attend but we don't 'force' the issue: in the end the cost to the client of one of our advisers being present throughout a visit could conceivably be more than any tax at stake.

The Inspector will issue a letter incorporating his findings, presumably including the issue of 'pool' cars. You should ensure that your accountant receives a copy of this letter, either from the Inspector or by copying your own, and consult with your accountant on the Inspector's findings.

In my opinion the fact that receipts were from petrol stations near employees' homes is not conclusive of a benefit in kind. It depends on whether or not those receipts relate particuarly to one individual, and/or to frequency.

You should be guided by your accountant but if you want some background information, I recommend that you look at

http://www.hmrc.gov.uk/manuals/eimanual/EIM23800.htm

http://www.hmrc.gov.uk/manuals/eimanual/EIM23803.htm

http://www.hmrc.gov.uk/manuals/eimanual/EIM23801.htm

http://www.hmrc.gov.uk/manuals/eimanual/EIM23806.htm

and also consider the findings of the court in the case of Gilbert -v- Hemsley - http://www.hmrc.gov.uk/manuals/eimanual/EIM23082.htm - but don't believe HMRC when they say that this case was decided on 'very special circumstances'!

If you are able to demonstrate that the vechicle was garaged overnight at business premises at least 40% of the time, and that when it was taken home overnight by an employee it was because they were going to a business meeting the following day, then I see no problem. If your employees work from home, then so much the better.

Regards,

Lambs
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Re: Company Car / Pool Car status

Postby Derek 0161 on Mon Jun 15, 2009 11:00 am

Thanks for the reply.

We have had a response from the tax inspector.

They have outlined an idea of the NIC that we owe, i.e. the company and individual employees and he has said he will inform the local tax office about his findings and suggested an income tax bill.

We would like to defend ourselves, however when the tax inpsector visited he gloated to our accounts administrator that he has "closed down" many businesses. He suggested that if agree to this he will "draw a line" under it and move on.

Is this normal? Should we defend ourselves? Or give up and take it on the chin?

We have met with our accountant (not flavour of the month at the moment as he knew these were pool cars) he says we will also have to pay a penalty. Frankly I have more faith in posting on here rather than getting advice off a so called "professional".

The tax inspector has said that the two vehicles have been filled up with fuel at weekend near an employees home, this is his basis for giving the individuals a tax bill.

He also claimed that employees were using the vehicles to go shopping (the cars were filled up at a supermarket), this is not the case as the employees can prove they shopped at a different time of the week in relation to fuel transactions.

Is it worth providing this information with the repsonse or is this futile?
Derek 0161
 
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Joined: Sat Jun 06, 2009 6:37 pm

Re: Company Car / Pool Car status

Postby aki on Mon Jun 15, 2009 1:26 pm

Quite disgusting the way the tax system works. Forcing tax payments based on assumptions and not hard facts - oppressive.
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Re: Company Car / Pool Car status

Postby robbob on Mon Jun 15, 2009 1:48 pm

Hello Derek

I would not be bullied by the tax inspector and really he should be sticking to legislation and facts rather than making threats and coming to non logical assumptions.
Such as presuming a car filled up at a supermarket indicates that this was a personal shopping trip.
However it is up to the company to show the facts mean that there is no benefit charge and Lambs has provided some excellent links but this case will rest on the details as supplied to the taxman and the details of the legislation.

For example what dates and times are the supermarket fill ups - this should give a very good indication as to whether there is private useage.If these all match in with business journies then this would backup your argument rather thann the taxmans.

I would start from scratch as far as putting systems in place for future treatment of pool vehicles so all the appropriate documentation is kept as you go that can prove that these are pool cars.
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Re: Company Car / Pool Car status

Postby Lambs on Sat Jun 20, 2009 9:21 pm

D,

As a 'qualified professional', I must say that I would rather be guided by a real live accountant, (or a good one, at least), with an intimate knowlede of the business in question, than the forum. This is not to denigrate my fellow contributors, many of whom are clearly of a very high calibre and would be entitled to charge significant fees for the advice they give freely here. Simply to say that, no matter the level of expertise, no matter how well crafted the advice, there's no substitute for "boots on the ground", so to speak.

Like you, my hackles would rise in the presence of an Inspector who bragged that his assessments had forced businesses to close. Perhaps presented in a way to indicate that you'd be better off settling for what might by comparison be much easier to bear? Too much of that kind of talk might make me inclined to speak to the Inspector's manager. It's not acceptable to 'bully' a taxpayer. I should stress that this is NOT a decision to be taken lightly, however. There is a very real risk that this will make matters worse, so you must be sure of your facts, etc.

I don't think your accountant is necessarily a bad adviser. I don't know the size of your business, the amounts at stake, or how much your accountant charges. He or she may simply be exercising restraint because of the relative cost of the assessment as against professional fees in fighting the case.

I wholly agree with R: inferring that the petrol was paid for on private shopping trips simply because supermarket filling stations were used, is a questionable bit of detective work, to say the least.

I feel there is some mileage in resisting the Inspector's assertions. Unfortunately, without knowledge of the case, I cannot advise on when or how to do so. Certainly if he's now put his case in writing, his bolt is shot, to a degree - it would look quite churlish if you disputed this point and he then threatened to open up other aspects - if he had genuine doubts about other matters, they should have been presented and made clear from the beginning.

One final point, picking up on what R said - if this pool car scenario is still going on, then keeping accurate records now, of who uses the cars, when and why, for a period of say a month, might provide an excellent specimen for contending that they are genuine pool cars. It's not as good as records from the period under enquiry, but if you can reasonably demonstrate that your business model/use of the vehicles hasn't substantially changed in the intervening period, then I see no reason why the Inspector shouldn't accept your contention that they were pool cars beforehand as well.

Regards,

Lambs
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Re: Company Car / Pool Car status

Postby paulywills1 on Sun Jun 21, 2009 6:09 am

I think the percentage of Petrol Stations in the country that are Supermarket owned will be very high.
Therefore the tax inspectors assumption on that particular point is debatable to say the least.
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Re: Company Car / Pool Car status

Postby Derek 0161 on Fri Jun 26, 2009 11:21 am

Thank you all for your kind contribution.

As our discussions progress I will provide updates.
Derek 0161
 
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Re: Company Car / Pool Car status

Postby Derek 0161 on Mon Jul 20, 2009 9:42 am

We have provided the tax inspector with some information regarding the use of the pool vehicles, although it isn't comprehensive. He still believes that the cars are not being used as pool vehicles and wants to apply a personal and company tax burden for what he perceives to be an underpayment.

He now wants to see a full vehcile log from the last 18 months, this is going to be difficult as some of it will need to be done retrospectively, is the burden of proof on us even though we have complied with the pool car criteria?

Any tips/info greatly appreciated.
Derek 0161
 
Posts: 5
Joined: Sat Jun 06, 2009 6:37 pm

Re: Company Car / Pool Car status

Postby Lambs on Sun Jul 26, 2009 4:40 pm

D, as advised before, can you get a log together for, say, the last 6 months? The Inspector is entitled to request records for several years and the burden of proof is indeed on you as employer to demonstrate that the vehicle is a pool car but I do think that if you are able to provide evidence for a current period as to how the car(s) is being used, that indicates pool car status, then I think you will be on much stronger ground.

Regards,

Lambs
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