Can two companies share a vehicle?

My client has two companies and one vehicle - can he avoid a BIK charge?

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Hi Everyone,

I'm wondering if anyone can see any problems with my client's plan.

He has two Limited Companies, which operate completely separate businesses in unrelated sectors.  In short - one of the companies owns a van, which he needs to use for both companies.  Up until now he has just paid the BIK for personal use, and didn't mind because he did also use the van personally.  However, he's just bought himself a rather expensive car so will only be using the van for the businesses.

His plan is that business 2 pays business 1 a monthly fee to 'lease' the van for part of the time.  Then both businesses provide him with the van as his work vehicle and because there is no private use he doesn't need to pay the BIK tax or the Class IA NIC.

Can anyone see any problems with this?  The total vehicle costs for the year are only about £2500 (petrol, insurance, repairs etc), and it was fully depreciated years ago, so he was thinking of a lease fee of around £100 per month so that they share the costs.

I think it sounds like it could work, but I have a nagging feeling that there is a reason we can't do this and I don't know why

Thanks in advance.

BG

Replies (18)

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By Truthsayer
03rd Nov 2020 17:12

If the van ticks all the boxes for not being a b-i-k, then there is no reason why it being provided by two companies should make any difference. The two company thing is simply irrelevant.

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Replying to Truthsayer:
Psycho
By Wilson Philips
03rd Nov 2020 17:20

Agreed. The insignificant private use tests are either met or they are not. Any agreement between the companies is irrelevant.

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Replying to Wilson Philips:
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By The Dullard
03rd Nov 2020 17:35

What if he drives between the two employments? You need to consider the definition of private use in the context of each employment, and use otherwise than for the employment concerned is private use . The business travel requirement (s155(7)) is also unlikely to be met in relation to one of the employments.

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Replying to The Dullard:
Psycho
By Wilson Philips
03rd Nov 2020 17:57

There was an implied “if” in my comment. What if he doesn’t drive between employments?

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Replying to Wilson Philips:
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By The Dullard
03rd Nov 2020 18:09

You mean maybe he's popping home between employments?

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Replying to The Dullard:
Psycho
By Wilson Philips
03rd Nov 2020 18:39

Maybe he is.

But I’m not sure that it matters. If we assume that his permanent workplace is home (maybe it is, maybe it isn’t) and he travels to customer of company A that is clearly business travel. If he then drives to customer of company B I would argue that is also business travel.

I suppose the question is whether the van is made available by reason of his employment by company A only, or by both A and B.

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Replying to Wilson Philips:
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By the_drookit_dug
03rd Nov 2020 20:57

Agreed. If company B is paying to hire the van, surely it has to be provided with the van by some means by company A i.e. the journey between them, or their customers.

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Replying to Wilson Philips:
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By The Dullard
04th Nov 2020 10:07

No, if you drive to a customer of A and then drive to a customer of B, your first journey is a private journey in relation to your employment with B and your second journey is a private journey in relation to your employment with A, the way that private travel and commuting are defined in s 338(3) and 338(5). That's the first issue.

The second issue is the business travel requirement in s 155 in relation to each employment.

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Replying to The Dullard:
Psycho
By Wilson Philips
04th Nov 2020 10:30

You may be right, I don't know. Let's assume you are, and assume that the permament workplace is home. So, to avoid a BIK, using a hypothetical example (and because it's hypothetical I can make it as absurd as I want):

Both companies will each need to provide him with a van. He drives to customer A in van A (80 miles). He then needs to drive to customer B, 10 miles away. But to do so, he needs to return home, drop off van A, junp into van B and drive to customer B.That's an emission-spewing round-trip of 170 miles turned into 320 miles. That makes perfect sense.

Your technical analysis may well be correct - how HMRC/Tribunal would view it, I have no idea.

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Replying to The Dullard:
Lone Wolf
By Lone_Wolf
04th Nov 2020 18:06

I don’t think you need to consider the journey to Customer B as a private journey by the employee, as it is not being conducted by him as a private individual, but rather as an employee of Company B.

Hopefully the following explains my thinking:

Company A is in business in Sector A, but also in the business of van leasing.

Company B is in business in Sector B only.

Company A employee’s duties therefore include their duties in Sector A, and the duties of a van leasing business which may include taking the van to a place designated by Company B for use by one of it’s employees.

So on your hypothetical journey to Customer A, he conducts this as an employee of Company A. His next task as an employee of Company A is to take the van to the location specified by Company B. Low and behold, he’s already the (it just so happens to be Customer A’s location).

He hops out the van, as employee of Company A, then hops back in as employee of Company B. As employee of Company B he now travels to Customer B and fulfils his duties. The van is now in the service of Company B, not him personally, and he is merely driving it in pursuant of his duties as employee of Company B, and so it is not a private journey.

He only drives it for business purposes for both companies, and so no BIK arises in either.

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By The Dullard
03rd Nov 2020 17:37

I would consider having the van owned by the company where the business travel is the least and having a van benefit in that company, and then claiming mileage allowance against the other employment. 8000+ miles and you're on to a winner.

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Replying to The Dullard:
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By Paul Crowley
03rd Nov 2020 18:22

Agree
But take it out of company altogether and claim mileage rate on both

And we all know what happens in 2 years time
Can co pay for the new engine?

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Replying to The Dullard:
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By frankfx
03rd Nov 2020 19:03

The Dullard wrote:

I would consider having the van owned by the company where the business travel is the least and having a van benefit in that company, and then claiming mileage allowance against the other employment. 8000+ miles and you're on to a winner.

Is that possible.?

Driver does not own the vehicle.

Mileage allowance 45 p has notional capital cost and other standing costs embodied in the rate.

Company A gets that element of relief via capital allowance and other revenue deduction.

Driver may claim fuel costs on company A.

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Replying to frankfx:
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By Paul Crowley
03rd Nov 2020 19:18

Fuel I see as a problem
Who pays for fuel?

I prefer all in or all out to avoid doubt

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Replying to Paul Crowley:
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By frankfx
03rd Nov 2020 20:10

Dullard had suggested driver pays for fuel and makes a ,45p per mile claim on Company B.

Yet Driver does not own the van.

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Replying to frankfx:
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By Paul Crowley
03rd Nov 2020 21:09

That means empty fuel tank and only fill with enough for each journey.
Sounds like a bad marriage.

I would stick to
Person owns and runs, claims the 45p
easier to justify

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By Batty Girl
03rd Nov 2020 22:56

Thank for all the replies.

In answer to the questions - the van is owned by company 1, which claimed CA on it several years ago, and pays all fuel and other costs.

The thinking was always that any use for Company 2 was not 'business use' for BIK purposes, as it was company 1 providing the vehicle. So for example, if I am employed and given a van by my employer, then I surely couldn't also use it for my own business and claim that there is no BIK because it is all business use. I would have assumed that any usage that is not business usage for the business providing the vehicle would result in the BIK charge (excluding that which could be insignificant personal use).

I think Wilson Philips summed it up with the comment "I suppose the question is whether the van is made available by reason of his employment by company A only, or by both A and B". His thinking behind the lease fee from one company to the other was that then it could be made available to him by both companies, for business use only, but for both of them.

He doesn't want to take the van out of the company if he can avoid it as it will result in a balancing charge, and he doesn't intend to use it privately at all, so he doesn't really want to own it.

It would also be a way of Company 2 helping cover the costs as it now uses the van as much as Company 1.

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Replying to Batty Girl:
By Duggimon
04th Nov 2020 11:35

The issue, as Dullard pointed out, is that if both companies provide him with the van, while he would then always be using it for business for one or the other, he would also always be using it privately from the point of view of the other company, resulting in double BIKs, not none.

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