BIK through a company the asset isnt owned by?

Can a company car be owned by one company and reported in another?

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The management company of a  group say Company A, has an employee who now receives a company car. The car is owned by Company B. Should the P11D be reported in Company B even though the employee isnt employed by Company B. or report the P11D via Company A where the employee is employed. That being the case how does that work with the costs of the car or should we then consider an additional cost to be charged between the companies for the use of the car? Sorry if thats confusing but appreciate your thoughts on this?

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By SXGuy
18th Jun 2024 16:56

I'm in no way an expert in bik so I could be way off, but a few questions spring to mind.

Who is providing the benefit and to whom.

Can an employee of company A receive a bik charge by using an asset of company B

Can company B issue a bik charge to an employee of company A.

Are company A and B connected in any way apart from this employee and asset.

That's just a few questions id need answered before commenting on anything relating to your question. There could be plenty other questions.

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Replying to SXGuy:
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By FactChecker
18th Jun 2024 17:09

"Who is providing the benefit and to whom?"
... very apt (and it's not even a VAT question)!

The 'simplest' would be the car-owner (B) provides the car (or even sells it) to A ... and A then provides the car (as a BiK) to A's employee.

Actually there are loads of simpler options - starting with don't use the car from B as part of the remuneration package offered by A to its employee.
But as you say, there's obviously more going on here than we're being told.

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By Samantha1685
18th Jun 2024 20:48

Thanks - yes all the same questions that I have in mind. I am new to a position and I was evaluating how things have been reported on previously and I suppose the BIK being from one company and reported in another comes about because, yes the companies are linked, the person receiving the benefit is a senior manager and gets paid from the holding company but isnt an employee of the company providing the benefit technically. Previously there was P11D raised under the company that provided the benefit. Its a different way from what Id be familiar with (only from the point of view that the person isn't an employee and that's what's threw me a bit) but it does make sense from all other aspects in my mind.

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Replying to Samantha1685:
Stepurhan
By stepurhan
19th Jun 2024 08:43

Samantha1685 wrote:
the person receiving the benefit is a senior manager and gets paid from the holding company but isnt an employee of the company providing the benefit technically.

If the senior manager is paid from the holding company, does that mean he is on the holding company's payroll? Because if that is the case it makes sense to report the P11D through the same payroll as his wages.

That is ignoring the question of why they are being paid by the holding company and how those payments are recorded in the respective businesses.

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By Tax Dragon
18th Jun 2024 22:27

It's old, but might help.

https://www.accountingweb.co.uk/business/management-accounting/how-to-re...

Further guidance in EIM and 480.

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Replying to Tax Dragon:
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By Tax Dragon
18th Jun 2024 22:37

Actually that pre-dates Pt7A (article 2010; Pt7A came in 2011).

It's unlikely Pt7A applies in your particular case, but it can be a consideration, and one that I guess is not mentioned in the article.

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Replying to Tax Dragon:
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By FactChecker
18th Jun 2024 23:46

Another interesting little 'wrinkle' - which I suspect escaped HMRC attention when they made their policy 'commitment' to do away with P11Ds ('cos it's much easier to payroll all BiKs ain't it).

[Pt7A is only relevant where a loan is transferred, released or written-off?]

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Replying to FactChecker:
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By Tax Dragon
19th Jun 2024 07:12

FactChecker wrote:

[Pt7A is only relevant where a loan is transferred, released or written-off?]

Not the time for a discussion on Pt7A. EIM45000 if you want to read up on it. Can apply to assets as well as money. Doesn't apply [absent additional factors] if the third party is in the same group, as in OP's case.

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By taxdigital
19th Jun 2024 08:33

Here is an outline answer:

There is an ‘employment’ (s.4 ITEPA) provided by Company A (“employer”) to the senior manager (“employee”).

The employer must file P11D every year with HMRC with certain information including those provided under Reg 87 (Reg 85 PAYE Reg).

The information includes any benefits provided by the employer or “related third party” for the employee such as give rise to any amount treated by Chapters 6 to 10 of Part 3, and section 223, of ITEPA. (Reg 87(c).

There is a car benefit if in a tax year the car “was made available” (without any transfer of the property in it) to an employee (s.114 ITEPA).

“Related third party” means a person……providing benefits to an employee, if the….provision of the … benefits by that person has been arranged ……….or in any way facilitated by the employer. (Reg 86(6).

Consequently, I believe Company A ought to file the form with HMRC, not the company which owns the car.

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Replying to taxdigital:
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By Tax Dragon
19th Jun 2024 12:31

I disagree with your use of "consequently". Believe what you like, but here your belief seems to arise from [be consequent to] an assumption (that the provision of the benefit was arranged or facilitated by the employer), as much as it does from the law.

Were the employer to start paying the provider, as the OP moots, then yes, I imagine that would be a facilitation and make the employer liable for the reporting. It would appear that to date there has been no such payment and we don't know enough of the backstory to conclude one way or the other.

Your technical analysis though looks correct - and (Pt7A aside) this suggests Rebecca Benneyworth's article is still current.

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Replying to Tax Dragon:
By Ruddles
19th Jun 2024 14:49

Does the provision of the car (or other benefit) need to be facilitated or arranged by the employer? I can think of plenty of instances where an employee has received a chargeable benefit from a 3rd party, which benefit arises only because of his employment but without any arrangement or facilitation on the part of the employer. My test - and I appreciate that it is not a statutory test - is to ask the question, "if the individual did not have this employment would he have received the benefit?" If the answer is "no" it is IMO reasonable to assume that the benefit arises by reason of the employment.

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Replying to Ruddles:
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By Tax Dragon
19th Jun 2024 15:08

The question wasn't whether it was taxable. It was how is it reported (and by whom).

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Replying to Tax Dragon:
By Ruddles
19th Jun 2024 15:17

Indeed - I just didn't get that far. Who reports benefits provided to an employee by a 3rd party was really my point. In other words, in this case I believe that - on the basis that the employee has the car because he is an employee of A - then it is A that reports the benefit regardless of any payment or arrangement between A and B. Just as A would report a car provided by a director of A (or of B) to an employee of A. Whether or not A (or B) paid anything to the director.

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By Tax Dragon
19th Jun 2024 16:18

Then what's the point of the related party rule that taxdigital highlighted?

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By Justin Bryant
24th Jun 2024 12:48

FWIW, there was always an argument that the employer did not facilitate EBT loans, hence there was no BIK on interest-free EBT loans (indeed, I recall that after Rangers that argument was correct). You should therefore compare & contrast assets provided (including under P7A) re that argument.

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Replying to Justin Bryant:
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By Tax Dragon
24th Jun 2024 21:02

Aiui, the 'facilitate' point is to do with reporting, not taxability; that depends on the 'by reason of' test.

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Replying to Tax Dragon:
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By Justin Bryant
25th Jun 2024 08:58

Eh? With loans it's to do with whether there's a BIK or not (on the interest free element) the first place re "arranges/facilitates" definition of an employment-related loan - see link below. You are no longer the ITEPA queen (if ever there was a time when you were).

https://www.legislation.gov.uk/ukpga/2003/1/section/174

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Replying to Justin Bryant:
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By Tax Dragon
25th Jun 2024 09:10

Justin Bryant wrote:

Eh? With loans it's to do with whether there's a BIK or not (on the interest free element) the first place re "arranges/facilitates" definition of an employment-related loan - see link below. You are no longer the ITEPA queen (if ever there was a time when you were).

https://www.legislation.gov.uk/ukpga/2003/1/section/174

Why in Justin's name are you talking about the employment-related loan rules?! In your first post, you suggested that an argument about non-facilitation might be applied to OP's question. At least, that's what I thought you were saying. But it did read as if non-facilitation implied non-taxability. Which is wrong. So I corrected that impression.

None of which has anything to do with employment-related loans.

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Replying to Tax Dragon:
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By Justin Bryant
25th Jun 2024 09:20

I give up.

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Replying to Justin Bryant:
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By Tax Dragon
25th Jun 2024 09:51

Sorry - I now do get your point. But your first post was open to a being misunderstood or misapplied in the way I described, which would have been unfortunate.

And the facilitation test in s174 is, I think, different and the argument you refer to may not transfer.

But you have made we wonder why an interest-free loan that is by reason of the employment but not employment-related as defined would not be taxable under Ch10.

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