An employer makes available to an employee a CO2-emitting van, which is used during the year on the following journeys:
Commuting from home to a permanent place of business: 1000 miles
Qualifying business use by that employee while at work: 900 miles
Qualifying business use by other employees while at work: 200 miles
Other use: 0 miles
Does this satisfy the conditions of s.155(7) IT(EP)A 2003, please?
One interpretation might be that business use = 900/1900 miles, which is <50% business use and therefore not "mainly" for business use.
Another interpretation might be that home-to-work commuting should be disregarded as "non-business use" consistent with s.155(5)(a), and/or the 200 miles other business use should be taken into account. Either of which would tip it over the 50%.
My gut feel is that the conditions are not satisfied for the exemption afforded by s.155(2)(a), and s.155(4)(b), not least because s.155(7) expressly refers to s.171(1) for its interpretation. Accordingly, in this case a BIK is chargeable. Do all y'all agree?
With kind regards
Clint Westwood
Replies (4)
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No
My interpretation of the word "mainly" is that it qualifies the preceding words "is available to the employee", which would look at the intention of the employer in making the vehicle available.
You are interpreting that word as qualifying "use for the purposes of the employee's business travel". I personally disagree with that construction and consider that "available to the employee" (as qualified by "mainly") qualifies the phrase "for use for the purposes of the employee's business travel".
So in your situation I would argue that there may be no benefit as the other condition in S.155(5) is qualified (provided the terms on which it was made available prohibited its use other than for business and personal commuting).
Just my view though. I've never considered the situation where the commute significantly outweighs the business use.
Reason for provision
Has the van been provided because the employee needs it to perform his duties.
If so then I would be inclined to allow the exemption to apply and no benefit to be incurred.
If however it is really just for commuting and they send him out once a month to pick up a part to try and get the exemption then I would agree a benefit has arisen.
I wouldn't let the numbers affect your decision and would instead look at the quality of the business journeys and indeed I would fight any arguement by the Revenue that a benefit had arisen.
Apologies
My reference to S.155(5) should have been to S.155(4). My eyes slipped!
The point I'm making is essentially the same as Valentino's. If the employer is making the van available primarily for the business use, but the availability for personal commuting follows from that, then in my opinion the van "is available...mainly for use for the employee's business travel. My focus is on the first "for", whereas yours is on the second.
As Valentino says though, if the van is being primarily made available so that the employee can get to work, then the "available... mainly for" test then fails and a benefit arises.