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BIK on Car When Not Used

Client has company car for his exclusive personal use and pays BIK taxation on it.  However, he travels overseas frequently, and car is not used for extensive periods (sometimes months at a time).  Does the company car benefit still apply during those periods when the car can not be used because he is overseas?


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21st Apr 2012 13:40


The car has been made available for his private use.  Whether he actually uses it or not is irrelevant.

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If he didn't need it he should have put it on SORN and then it wouldn't have been available?

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21st Apr 2012 15:46

SORN should be unnecessary

If he is going away for planned long trips, he should simply hand the keys back to the employer and ask them to lock it away in a garage (or provide it to someone else). It is therefore unavailable to him.

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Sorry assumed OMB ....

and have always advised that this is the only way out.

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SORN won't work

Even if a car has a SORN, it's still available for private use, if the employee/director has access to it.  There's a difference between "available for use" and "available for lawful use".  Despite the SORN, the employee/director can drive it to the other end of the country if they wish (ie it's available to use), notwithstanding that it would be unlawful to do so.

HMRC cite "no road tax" as a circumstance in which they do not accept that a car is unavailable.  See EIM25175.

EIM25170 sets out the very limited circumstances in which they will accept that it's unavailable.

I accept that it's just HMRC's view, but it's a view that I personally wouldn't feel at all confident in challenging.

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23rd Apr 2012 11:16

Company car unavailable

This is a notoriously grey area. As Steve K says, the approach outlined above is just HMRC’s view. I would be a little more confident in feeling that the HMRC attitude re “no road tax” could be challenged in certain circumstances. The practicalities depend very much on whether the individual is an employee of a large company or is director of his own family company.

At one level, it would be absurd to suggest that a rogue director could avoid any benefit in kind simply by driving a car that has no road tax. On the other hand, a car might legitimately be off road for a period, and possibly untaxed, uninsured and overdue for its MOT. In such a case, it should if possible be kept at work rather than at home. If a record of total mileage is kept to demonstrate that there was in fact no use of the vehicle, I doubt that HMRC would convince a Tax Tribunal that the vehicle was still available for private use. The case should be enforced by keeping a written minute to the effect that the car is not available for the employee’s private use for a given period (though the Hemsley case makes it clear that this may not be appropriate for a director).

Taking such steps can be a pain, though. No doubt the client in this case wishes to have the car available for his private use the moment he returns to the UK. And realistically, the employer probably does not want the vehicle to be uninsured while the individual is abroad. So what are the options?

If any other member of the employee’s family or household can use the vehicle, then it is quite clear that there is an ongoing benefit in kind.

Where the employee is away for short periods, of less than 30 consecutive days, the car will in any case be treated as still available for his private use (see ITEPA 2003, s. 143(2)).

If the employee is away for a period of at least 30 consecutive days, and if the car can be kept at business premises rather than at the employee’s home, it may well be possible to take all reasonable steps to make the car unavailable – ideally a SORN but failing that a formal note on file, handing the keys in to the employer, and perhaps an approach to the insurers asking them to cover business use only for the period in question. (If they refuse, keep the note on file anyway, and make a point of notifying them in future of any extended absences.) Declare the reduced benefit, declare all the facts very clearly, and be prepared to run a simple case in front of the Tribunal.

If that is all too much work, re-evaluate whether the company car benefit is worth incurring at all – it may be better to transfer the vehicle to the employee or at least to go for a private car when this one comes to be replaced. (In the meantime, take great care to ensure that the fuel charge is not incurred, intentionally or otherwise.) Again, the pros and cons (re cash or car) will depend on whether we are dealing with a small family business or a large employer.

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Ray, some great insight. Thanks.

Can you give me a citation for Hemsley?  I'm actually doing a spot of research on this and the best case I've come up with so far is Golding, which might be of interest to the OP and others.

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23rd Apr 2012 12:51


Thanks Steve

In case anyone else wants it, the case was Gilbert v Hemsley (1981) 55 TC 419. 

Perhaps I can also mention my recent Company Cars book (resisted doing so first time round!), available direct from Claritax Books or from AccountingWeb Shop.

Good luck!


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23rd Apr 2012 12:52

Taxes certainly don't have to be fair

So HMRC are willing to believe that dastardly employees will drive an untaxed, uninsured and have no MOT cars but draw the line that they will hotwire one if they don't have access to the keys?

EIM25170 seems to imply that the car actually has to be in working order. Does anyone know to what extent? For example, if you took one of the wheels off then it is not physically capable of being used.

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25th Apr 2012 11:51


hand it back and take 45p a for me

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25th Apr 2012 15:30

Key word - Available

I have not read all revenue's own interpretion but I would think the key word here is 'Available'.

As such simply being away on extended periods does not mean the car is not 'available' as presumably the client can return at any stage and use the vehicle.  (An overseas villa provided by the company may not be used for many months at a time but is still a BIK as it is always 'available' to the employee.)  Similarly other members of the family or even friends could use the vehicle.

Similarly handing the vehicle back to the employer, especially a senior employee, by itself may not be sufficient to avoid the BIK as this could be challenged by HMRC.  All handing the vehicle back to the employer is in essence doing is garaging the vehicle at an employer's garage rather than the employee's - the employee could still (especially if a senior employee with influence) return at any stage, have the keys given back to him, drive around for a few days and then hand the keys back to the employer before returning abroad.  I feel the only sure way would be if the car was genuinely not available to the employee and it was in use for the benefit of the employer elsewhere.

Therefore the proposed solution of handing keys back, garaging the car up and only using it for the benefit of 1 employee I feel would still be regarded by HMRC as a full BIK.

The situation reminds me of the following joke: Guy goes into a london pawnshop and asks if he can have £3,000.  "What have you got to pawn?", says the broker.  "My new ferrari." comes the reply.  So the money is handed over and the keys exchanged.  3 weeks later the guy returns, hands over the £3,000 plus £400 interest/charges and gets the car keys back.  The broker ask, "You seem a rich and affluent person, why did you need to borrow £3,000?"  To which the guy replies, "Where else could I park my ferrari in central london for 3 weeks for only £400?"

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26th Apr 2012 15:45

At a recent course...... was stressed that what was important when judging whether a BIK would arise was whether "the car was available to the director", and not necessarily whether "the director is available to drive the car".

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