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A little quandary - advice appreciated...

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I'm a company accountant and have encountered a situation that has left me wondering/worrying about what to do...

The company previously provided a company car to an employee, which was stored on the company premises overnight and no P11D benefit declared - detailed mileage records were maintained demonstrating no private mileage, and the keys were handed in at the end of the day. However, during the Covid pandemic, the employee was made redundant and the managing director has taken it upon himself to make use of the car...

No mileage records are now kept, and the vehicle never seems to be on site anymore - it appears he's keeping it at his home premises. I've spoken to him about the benefit in kind consequences of making the car available to himself for private use, and he simply argues with me, stating that there's no private use and that his home is effectively a workplace anyway as he does a lot of work from there. I've told him that I don't think HMRC would accept his reasoning, but it doesn't cut through.

As the person tasked with submitting P11Ds, I wouldn't feel at all comfortable submitting a £Nil return. However, I can't see me at all getting authorisation to submit a P11D which could possibly show that he's due around £8k income tax in the worst case - he'd blow his top!! My fear is that his pattern of usage is such that it's probably available for private use all year round - who knows though!

What should I do?? Hand in my notice whilst we're still months away from the filing deadline for 2021/22? 

Replies (31)

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By Paul Crowley
06th Dec 2021 17:14

You employer is acting inappropriately
Consequences fall on the company and the director

BUT If that is your real name I strongly suggest you get Aweb to make this An Anon posting or get a Name change to a Pseudonym urgently

PM this person
Richard Hattersley
By Richard Hattersley
06th Dec 2021 12:37

And do not post any replies until resoved
Changing the thread to Anon does not change your replies
They would still carry your name

https://www.accountingweb.co.uk/any-answers/how-to-use-any-answers
Read the Anon comments on this thread

If there is an element of personal or professional sensitivity in your question, there is the option to contact a team member and request for it to be posted anonymously. Please contact [email protected] or directly message a moderator or editor to discuss the situation further.

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Replying to Paul Crowley:
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By the_drookit_dug
06th Dec 2021 21:39

Sounds like a nickname to me...

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By David Ex
06th Dec 2021 17:13

Hopefully you aren’t using your real name.

It’s a very difficult situation to be put in. Hopefully someone will have some useful thoughts.

Have you spoken to your professional body’s helpline?

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By ireallyshouldknowthisbut
06th Dec 2021 17:19

@OP, I think the key thing here is :

1. Right now nothing is wrong, ie the paperwork is not late
2. Whilst you can point out the things that are wrong, its not your issue.

Really your role here is covering your behind professionally. if you are a member of a professional body, I would speak to their helpline. ICAEW ethics helpline would nail this sort of thing. I would be probably looking at ensuring you have a record of written advice given to the director, and him ignoring your advice. This might of course not be raised until the end of the tax year in ther normal course of your P11D cycle unless your payroll it, in which case I would get stuck in (maybe after bonus season!)

Bit of luck your external accountants will spot this......they are in a better position to go in with both feet and moreover if they sign off on it, its really not your problem any more.....you might like to mention something like "this is exactly the sort of thing they ask me about during the audit/year etc etc "

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Replying to ireallyshouldknowthisbut:
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By RetiredTax
06th Dec 2021 17:58

"the paperwork is not late" What about the mandatory submission of P46 car to HMRC?

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Replying to RetiredTax:
By ireallyshouldknowthisbut
06th Dec 2021 18:34

Forgotten about those, but those are really only to align the coding in year, if you don't file them, nothing happens. Its "second tier" timing only paperwork. ie doesn't contribute to the actual tax paid.

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Replying to ireallyshouldknowthisbut:
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By Paul Crowley
06th Dec 2021 20:02

+1
Reply to 17.19

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By Barry Carlisle
06th Dec 2021 22:37

Thanks for the comments everyone. Yes, I am using a pseudonym - hope I'm not breaking forum rules.

In terms of advising the managing director of the rules, everything has been verbal so far. Thinking I'll lay down the rules clearly in an email. I'm not expecting a response by email though - it'll almost certainly be verbal, no paper trail.

Problem comes though as the P11D deadline looms. Do I simply refuse to submit, and insist he instructs the external accountants to do it for us? That way I'm cut out the loop, and he has to either lie to them or come clean and stump up any tax. I guess with the former, I still have a duty to consider my response in terms of non-compliance with laws and regulations per my institute's code of ethics.

Perhaps a discussion with my institute is necessary. Current thinking though is to lay down the rules, and if the response isn't satisfactory, I seriously consider leaving before the P11D submission deadline.

Maybe my thinking sounds extreme, but I can't be doing with this - I'm confident I'll pick up another role.

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Replying to Barry Carlisle:
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By Paul Crowley
07th Dec 2021 01:08

Get the job first if you are seriously considering this

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Replying to Barry Carlisle:
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By paul.benny
07th Dec 2021 08:44

This may be a matter of "bother, I didn't realise this would cost me". Or a sign of disregard for law and/or the expertise of specialists.

If the former, he may eventually come round; if the latter, you should look for another job.

And on the point at issue (as I'm sure you know), the test for a car being a bik is "made available" not whether or not there is business use. Although not directly relevant, there was a VAT case reported here a couple of years which illustrates the challenges.

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Replying to Barry Carlisle:
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By vstrad
09th Dec 2021 17:11

If I can only obtain a verbal response to a yardarm-clearing email, I always summarise that conversation in a further email.
"Just to confirm that, in our recent conversation, you said ..., I said ... . The outcome was ..."
Works a treat.

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By Tax Dragon
07th Dec 2021 01:33

What do you make of the words "furnishes, gives, produces or makes" in s98(2) TMA 1970?

Your employer should not ask you to put yourself in a position where you personally could be liable to a penalty (if that's what those words mean).

Doesn't sound like you'll let that happen anyway. But maybe this thought gives you a bit more leverage to get the forms done properly.

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By paulwakefield1
07th Dec 2021 09:43

I would set out in writing to him what the issue is including the immense difficulty of getting around the "available for private use" point and explicitly state the benefit cost to him.

One can but hope that the latter may concentrate the mind (more than just the verbal advice to date). And, if a P11d is eventually submitted, protects you from the accusation of "Why didn't you tell me earlier and I could have got rid of the car to mitigate the cost?".

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By Tax is always taxing
07th Dec 2021 09:56

Do people actually get stressed/worry about these sort of things?

I think perhaps I need to do an ethics refresher!

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Replying to Tax is always taxing:
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By Tax Dragon
07th Dec 2021 10:03

Tax is always taxing wrote:

Do people actually get stressed/worry about these sort of things?

I think perhaps I need to do an ethics refresher!

People? Some and some.

Professionals? Have standards.

Professionals employed by people? That's where the stress/worry can come in - if the people in question are the second sort of some.

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Replying to Tax is always taxing:
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By Barry Carlisle
07th Dec 2021 10:27

It would certainly be possible to turn a blind eye - I've mostly been working from home throughout the period, and there's nothing in writing to indicate I know anything about how the vehicle is being used.

Why should I though? I'd still be submitting the P11D knowing that it was incorrect and significant sums of tax were being evaded. The thought of being expected to do that really p!$$e$ me off!

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Replying to Tax is always taxing:
By ireallyshouldknowthisbut
07th Dec 2021 10:35

Tax is always taxing wrote:

Do people actually get stressed/worry about these sort of things?

I think perhaps I need to do an ethics refresher!

if you are a tax professional, then yes you should.

"just following orders" is a poor excuse and ultimately will blow back and hit you hard.

Look at this situation, if our op keeps his head down, lies for his boss and it comes out in the wash 18 months later (eg external accountant is awake), the boss will most likely make the OP the scapegoat for this, conveniently forgetting the conversation that recently arose.

The OP need to stand tall, and read the rules and ensure the noose is tied firmly around the director's neck and not his own, should the stool be kicked out from beneath them. Not only is it the right ethical thing to do, it will make you better respected to stand up than cower down, if unpopular in the short term.

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Replying to Tax is always taxing:
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By paul.benny
07th Dec 2021 11:15

Tax is always taxing wrote:
I think perhaps I need to do an ethics refresher!

Correct.

The fifth of the five fundamental principles underlying the ICAEW code obliges the professional accountant to comply with relevant laws and regulations. There are similar provisions in the ethical does of the other UK accounting bodies.

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Replying to paul.benny:
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By Tax Dragon
07th Dec 2021 23:47

paul.benny wrote:

The fifth of the five fundamental principles underlying the ICAEW code obliges the professional accountant to comply with relevant laws and regulations.

Glad that sneaks in in fifth place.

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By Calculatorboy
07th Dec 2021 23:30

Who'd be a professional accountant working for a private company given the hassles ?

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By tom123
08th Dec 2021 08:25

I have worked in many SME businesses over the years, and, to a greater or lesser extent this type of thing has cropped up in every job.

However, one still needs to work, and can't resign at the slightest thing.

Advise the MD of the tax situation. Explain that HMRC will not believe, whatever assurances one tries to give, that this is a pool car.

Explain that penalties will be double.

Arrange a login to the portal for the MD, and ask him to do the submission.

You have plenty of time between now and next July, so don't worry too much at this point.

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Replying to tom123:
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By Barry Carlisle
08th Dec 2021 09:26

Thanks Tom, great suggestion.

I agree, whenever I look in detail at the setup in any company role I've been in I can always find something over which I have a question mark - most though are what I'd consider grey areas.

While the MD is being unreasonable, I think he'll understand if I explain that I simply cannot submit what I consider to be an incorrect P11D.

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By alanpoole
09th Dec 2021 11:23

It's the responsibilty of every professional to act honestly. I'm sure you will. In the meantime. The MD says he works from home a lot. He probably does, particularly at the moment. Maybe consider adding his home to his contract of employment as a place of work, perhaps his principal place of work? It sounds like it's a fact so no problem there. Then explain that a notbook in the car to record private mileage, which can be paid for, removes the problem. Given he sounds like a chap who will be more interested in business than shopping, his private mileage will probably be low, particularly if the family have another vehicle.

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Replying to alanpoole:
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By Tax Dragon
09th Dec 2021 12:12

alanpoole wrote:

Then explain that a notbook in the car to record private mileage, which can be paid for, removes the problem.

It's true that Step 8 in s121 ITEPA 2003 permits a deduction from the BIK for payments made in accordance with ibid s144. But if private mileage is low, as you suspect, it's unlikely the payment will be very much, so I don't see how it "removes the problem". Most of the BIK will remain.

And btw that's even if any payments made met the tests in s144. The toughest one here could be that the requirement (and it has to be a requirement - another s144 test) for the director to make the private use payments was a condition of the car being made available in the first place.

Or am I missing something?

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Replying to Tax Dragon:
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By Hugo Fair
09th Dec 2021 17:16

I guess it depends on what "problem" is thought to be being removed ... this thread has meandered somewhat into interesting but disconnected issues.

OP: "it appears he's keeping it at his home premises. I've spoken to him about the benefit in kind consequences of making the car available to himself for private use, and he simply argues with me, stating that there's no private use and that his home is effectively a workplace anyway as he does a lot of work from there"

My reading is that this means 'provision' of the car is therefore a BiK, because it is available to employee when not at work (irrespective of whether it is used for any private mileage). [The note of private mileage, if accompanied by evidence of repayment for relevant fuel to company, may mitigate the additional BiK for fuel - but has no bearing of availability of vehicle].

So we're left with the quantum-like issue of whether Director's house can be both his home and his office simultaneously ... and whether HMRC would agree that therefore the car (without being moved) was only available at place of work (but not elsewhere)!

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Replying to Hugo Fair:
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By Tax Dragon
11th Dec 2021 07:52

This particular avenue we find ourselves driving down is almost certainly a cul-de-sac.

Do you mind explaining the significance (fuel benefit aside, which I don't think OP mentioned*) of the quantum house?

If you are thinking of s167(3)(e), I hope that test isn't met (in the way I think you frame it) - else you have to consider whether you will be adding the benefit of living accommodation to the P11d as well. In any event, if that is what you meant, you appear to have forgotten (a) to (d).

If that's not what you meant, do you mind providing a signpost for me to follow?

* But very kind of alanpoole to propose a solution to an issue that hadn't been raised, without saying that's what he was doing - and indeed appearing to conflate it with the potential ethical 'problem' that the OP had asked about.

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Replying to Tax Dragon:
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By Hugo Fair
11th Dec 2021 12:12

I really must stop making flippant remarks within the context of what is ultimately an issue of tax legislation.
FWIW, no I wasn't referring to s167(3)(e) ... indeed I wasn't assuming that the idea of treating the vehicle as a 'pool car' was even under consideration - in my mind it would clearly fail the test at s167(3)(c) twice.

[Similarly s148(1)(c) makes it clear that this is not a case for reduction of cash equivalent where car is shared].

What I was attempting to reference was s118(1), which on the surface appears to provide a 'loophole' - whereby "a car .. is to be treated as available for the employee’s .. private use unless in that year—
(a) the terms on which it is made available prohibit such use, and
(b) it is not so used."

Others, including you, may know better ... but IIRC in practice HMRC have treated any car that is 'taken home' at night and parked there as breaking that loophole (possibly on the basis that as soon as employee drives to work then that this is private mileage).

Having wandered this far down a rabbit-hole of my own (previously unexplained) construction, I was endeavouring to postulate the question of how HMRC might regard the 'quantum' effect of a house that is both not the place of work (home) and the place of work (office) ... given that there is then no need to have a caveat about commuting between the two.

In short, it was a throwaway remark ... and having tried to remember what was in my mind at the time and dredged up post-hoc explanations, it might have been better left discarded (or even not made in the first place) ... but I hope this sheds the little light that you requested!

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Replying to Hugo Fair:
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By Tax Dragon
12th Dec 2021 02:55

Thanks Hugo. I now understand that your reply to me was a synopsis of the thread as a whole. As you say, a notebook in the car might help keep track of business mileage which might help with avoiding a fuel benefit in some cases, but, again as you say, it won't prevent a car benefit.

It was probably your "so we are left with" transition to the quantum house that threw me first time. Now, it seems obvious what you meant. I'm not sure why I didn't understand before. (It's not the first time I've been focused on one point while you - or someone else - has taken a step back to make a wider comment in reply.)

The workplace at home argument (with or without a notebook in the car) doesn't prevent a car benefit either, of course. Indeed travel to the mill may still be ordinary commuting - private use.

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By brumsub
09th Dec 2021 11:39

I would have thought your first problem would be the P46 Car Form - details of a car available for (first) use? And, there are specific time deadlines for these. This should also be pointed out to the Director, even if he has a another company car?

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By FCExtraordinaire
09th Dec 2021 13:47

Put all your points in an email to the director that you will be submitting according to the HMRC legislation re P11D. Should he argue and he does not agree and requires you to submit a nil return due to the circumstances he states of a workplace from home, he is ultimately responsible for that submission.

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By richard.snape
11th Dec 2021 00:52

I am absolutely no expert, but it occurs to me that in the worst case of you having to leave, you might have a case for constructive dismissal.

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