P11D for Shareholder

P11D for Shareholder

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I have a client who provides a company vehicle to one of the shareholders. Does anyone know how the shareholder is taxed. I seem to have read somewhere that the tax due on the benefit is treated as a dividend?
Andrew Ripley

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By wdr
03rd Jul 2007 09:25

ICTA s418 treats the notional'benefit' as adistribution, but HM
The specific legislation which Andrew has in mind is ICTA s418(2)-but HMRC maintain that as a consequence an equivalent amount has to be added back in the company's corporation tax computation. Their argument , praying in aid ICTA s337A(1)(a) is set out at
http://www.hmrc.gov.uk/manuals/ctmanual/CTM60520.htm

but it is nonsense-do not allow an inspector to browbeat you on this.

HMRC's argument is that because s418 says that a notional figure[the sum equal to a 'benefit'] is to be treated asa distribution, that equates a notional figure to a deduction otherwise claimed by the company , which therefore becomes an additition to the taxable profits for the company.


This argument in another context has been rubbished by the Court of Appeal in Bricom Holdings Ltd v CIR (70TC272). Just say 'No !', and threaten to take the case to the Special Commissioners if they press. You will find that they will be very reluctant indeed to allow their public stance to be examined under the glare of publicity.


A s418 issue can arise as well where a former drector dies with an outstandingf overdrawn DCA


PS If the shareholder concerned is an 'associate' of a director, then s418 will not apply, but instead the benefit will be assessable on the director him/herself

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