I understand that if a director has permanent access to a Co car then they will be liable to be taxed on the benefit of the car. Would this still be the case if the director only used the car on work days?
Hypothetically (sort of!), a 1 director company, if the company bought the car and the director used it for the work within that company, but didn't use it on non work days could they get away without the taxable benefit if they could demonstrate that they had access to a different car on those days.
Or, and as I suspect, would the fact that the car is available for use even if not used be enough to trigger the BIK? Would you have to have business use only insurance in order to prove the prohibition of personal use?
__________________
Jenny
Responses are my opinion based on the information provided. All information should be thoroughly checked before being relied on.
I would say that the fact that the car was made available to the director made it a company car, otherwise he could use his own car and charge out a mileage rate. Potentially if the car was available to be used by all/any employees and the car was left on site it could be considered a 'pool' car but I would make sure you had everything in place for that, including hmrc's agreement.
Thanks for your reply Rob. There is no site unfortunately so couldn't really been seen as a pool car; it is a one director co, and the director uses the car to travel to various places of work each day from the registered office, which is their house...
__________________
Jenny
Responses are my opinion based on the information provided. All information should be thoroughly checked before being relied on.
I think that hmrc would consider this a company car...sounds like one ofthose cases where the director has had a drink the pub with a mate who reckons 'a good accountant would sort this so theres no tax to pay' and hence pressure on you!
When working out the P11d car benefit, there is a calculation for how much of the year the car was made available, I've only ever lloked at this if the car was supplied or ceased to be supplied part way during the year, but maybe if the car was only available 5 days a week then a restriction could be made. However, if the car is at the directors home I would think hmrc would say it was always available just not being used. If he got an electric car I think the bik is zero!
Thanks, I got fed up with Bobby Ewing! this was the Shakespeare 100 which I rode in a last month and was in aid of MacMilllan Cancer Support. At 85 miles my back wheel broke and I ended up having to push the thing for the next 3 miles until I found a pub to be rescued from!
Yes definately along those lines. Quite a high maintenance client!
You've said what I thought, that HMRC would never go for it. Now to start the calculations to prove whether it's better to suffer the BIK or to just claim the mileage.....
(It's complicated client month, wait until I post about the IR35 debarcle!!)
__________________
Jenny
Responses are my opinion based on the information provided. All information should be thoroughly checked before being relied on.
IR35 doesn't appear to be the hot potato it used to be and is apparently 'under review' by the coalition government. I tend to make clients aware of IR35 and taht it is possible to pay for a contract that should be 'IR35 proof' but that I don't take any responsibility if it goes horribly wrong! Nowadays most contractors insist they are outside IR35 and it is something that hasn't come back on them.
That's interesting. I was aware that they were reviewing it, but I guess that wouldn't apply retrospectively.
In my opinion this contractor is in IR35, the company he works for says no-one else has had any problems, and the company I got to review his contract also say he is in it, he'd rather like his accounts done as though he isn't. So what to do...! The cost of an enquiry and back taxes would be immense.
__________________
Jenny
Responses are my opinion based on the information provided. All information should be thoroughly checked before being relied on.
I would suggest he gets a firm like Accountax to review his contract/amend it so it is bomb proof, otherwise make sure you write to him suggesting he does this as he 'may be caught under ir35 and the responsibility lies with him'
I will look at Accountax. However we're dealing with an issue that started at least 18 months ago (he's only just decided he needs accounts) so even if they were to look at it now we'd still be left with the historical issue.
Do you think these IR35 insurance schemes are worthwhile? I saw one that even said it would cover the cost of the tax/ni if you were found against in the event of an enquiry.
__________________
Jenny
Responses are my opinion based on the information provided. All information should be thoroughly checked before being relied on.
IR35 is a mindfield and I would be very wary of this issue. And for a one man company, I would never recommend the car is in the co's name, asking for trouble really.
IR35 is a mindfield and I would be very wary of this issue. And for a one man company, I would never recommend the car is in the co's name, asking for trouble really.
P
Trouble? Or expensive BIK tax?
__________________
Jenny
Responses are my opinion based on the information provided. All information should be thoroughly checked before being relied on.
These guys expect something they cannot have - just stick the car through the co, you'll be alright! They always see the co as an extension of their own pockets and not a seperate business.....
With IR35, you need to be careful on his contracts, especially time etc
As to expese on BIK, depends on the car, CO2 etc etc
Yes they do, I have given the 'legally this is not your money to spend' lecture several times lately. I might just record it and stick it on youtube to save my voice!
One person came back with 'but my old accountant said once I had a Ltd Co I could just buy whatever I wanted out of it'. Brilliant advice there old accountant, well done.
-- Edited by BudgetB on Wednesday 20th of October 2010 03:22:30 PM
__________________
Jenny
Responses are my opinion based on the information provided. All information should be thoroughly checked before being relied on.
The odometer method is used but its not actually used that widely for those outside the transport business.
Your client must keep a log and the log should state :
Date of journey Miles consumed Who and Where visited (i.e. Scottish Widows, Edinburgh) Reason for the journey (i.e. visit client site)
I always enter there and back again journeys seperately as the back again journey may involve A to B to C to D to A each being a different client.
The mileage recorded in the book must be the actual mileage travelled, not what Google says as the two are seldom even close when one takes into account things like enforced detours, plus of course even going a long way on the same road there and back will be different distances
To use Google the client probably isn't doing themself any favours over the actual mileage that they are doing. for example, using postcodes my house to Edinburgh according to Google is 277 miles yet using the same roads that Google suggests the reality is that it is nearer to 288 there and 282 back again (those long bends on the M6 / M74 sure add up on a long journey) so average of 285 miles rather than 277.
bulking journeys is not acceptable. each journey and the reason for it must be recorded seperately and HMRC may take it upon themselves to verify a selection of the journeys to ensure that such were made legitimately.
kind regards,
Shaun.
p.s. edited for a silly gramatical error in the first line where I started writing before putting my brain in gear. Also a couple of other minor changes but nothing fundamental to the original answer.
-- Edited by Shamus on Saturday 1st of June 2013 04:02:33 PM
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Please can anyone tell me whats the rule of record mileage log for personal car? Whats details have to shows on the mileage log spreadsheet ? My director started to argue with me when I was asking him to let me know what hes cars odometer show then I can record the start mileage on the spreadsheet, he was very rude and told me its dosent make any sense to do that`s way and he said we only need to add the miles together what he will let me know about his each journeys -he`ll check it on google..
So he confused me completely Im not sure now whats the legal way to do it and deal with hes rudeness!
