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Pool Car Query

Hi

We are a small company which has the main office at the directors home address, we need to visit site regularly and are considering purchasing a new vehicle for use by all employees as a pool car, the main issue seems to be the business premises are the same as the directors home address. Even although the vehicle will be for soley business use and no private mileage will be allowed, will this still fail the pool car test? it seems unfair if it does?

Rgds

Les

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23rd Jan 2011 10:15

Pool Car

If the car is available for private use then it does not satisfy the criteria for a pool car even if it is not used privately.

The key word here is 'available' and by being kept at directors home it would be deemed to be.

Seems unfair? That is because it is unfair.

Buy a house with an annex!

 

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23rd Jan 2011 10:26

Pool Car / Company Policy

Is it not sufficient to satisfy that test to have documentary evidence ie employment contracts company policy to prevent private use?

 

Rgds

 

Les

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23rd Jan 2011 11:02

Insurance

Also having it insured for business use only would be a good indicator ?

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23rd Jan 2011 15:05

Indicators

Have as many indicators as possible but if the car is kept at the home of the director it is not allowable as a pool car as it does not satisfy the criteria as it is available for private use.

I agree that this is unfair but thems the rules.

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24th Jan 2011 11:03

Three things...

1) Read and digest the case of Yum Yum Ltd at http://www.bailii.org/uk/cases/UKFTT/TC/2010/TC00616.html.

2) If the car is made available on terms that prohibit it's private use and it is not, in fact, so used, then it doesn't matter whether or not it's a pool car, as there's no car benefit by virtue of Ss. 114 and 118 ITEPA 2003.  However, consider the Yum Yum decision, you will need to demonstrate that this is so, or it might be assumed otherwise, as Jason suggests.

3) Jason's assertions on the pool care aspect are not entirely correct, as the obstacles can be overcome, if they're overcome as a matter of fact, and that can be demonstrated (look at Yum Yum!).  The requirements (under S.167 ITEPA 2003) for a car to be treated as a pool car are:

a) the car was made available to, and (as a matter of fact) actually used by, more than one employee.

b) the car was made to the employees by reason of their employment (generally assumed).

c) the car was not ordinarily used by one of those employees to the exclusion of all others (as a matter of fact).

d) any private use (which you say - as a matter of fact? - is prohibited) of the vehicle by any of the employees is merely incidental to that employee's other use of it.

e) the car is not normally kept overnight on or in the vicinity of any residential premises where any of the employees is residing, except while being kept overnight on premises occupied by the person making the car available to them.

The italicised words in (e) above mean that the nub of your problem can be overcome by the director granting the company licence to occupy that part of his residential premises where the car is normally kept overnight.

Since that licence would, in effect, be the grant of facilities for parking a vehicle, it is a taxable supply for VAT purposes that may, or may not, have an impact.

EDIT: Found it! The Industrial Doors case is worth a read too: http://www.bailii.org/uk/cases/UKFTT/TC/2010/TC00571.html

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24th Jan 2011 11:27

Pool cars - more complexity

I think things may be a little more complex as Section 167(3) ITEPA 2003, actually says :

"In relation to a particular tax year, a car is included in a car pool for the use of the employees of one or more employers if in that year—

(a)     the car was made available to, and actually used by, more than one of those employees,

(b)     the car was made available, in the case of each of those employees, by reason of the employee's employment,

(c)     the car was not ordinarily used by one of those employees to the exclusion of the others,

(d)     in the case of each of those employees, any private use of the car made by the employee was merely incidental to the employee's other use of the car in that year, and

(e)     the car was not normally kept overnight on or in the vicinity of any residential premises where any of the employees was residing, except while being kept overnight on premises occupied by the person making the car available to them."

The actual provision relating to where the car is kept (e), are wider than sometimes thought given the exception if kept on premises occupied by the employer.  This helps if director lives close to actual company premises.

However, not sure it will help in this case - does the company actually occupy premises at Directors house.  I assume there is no formal lease or licence to evidence this.

Pool cars always seem to bring out a few issues!

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