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Company Car BIK while furloughed

Company Car BIK while furloughed

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The vast majority of our field based team were furloughed at the end of March and are gradually being brought back into the business as required.

I was also furloughed for the majority of this time just being brought back at month ends to submit VAT, Intrastat etc.

During June I also completed the P11d's for all company car drivers for 2019/20.

Some of the drivers who were furloughed have not used their company cars whilst not working and have taken photos of their mileage at the start and end of furlough to prove that they did not drive the cars during this period. It was not possible/practical to return the vehicles to head office during this period during to travel restrictions and the distances involved.

Looking forward to the 2020/21 tax year will HMRC accept this approach or, as the cars were still with the drivers and available to drive, would they still be considered a BIK?

Any suggestions as to what they could have done differently?

 

 

Replies (6)

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By Paul Crowley
21st Jul 2020 12:15

Without any specific new guidance we come back to
Were the cars available for use?

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Psycho
By Wilson Philips
21st Jul 2020 12:24

The suggestion was that the keys should have been handed back for the furlough period. That does come with implications for the health of the vehicle but most consider that would have been the only way to avoid the BIK.

But it is not beyond the realms of possibility that HMRC might issue some concession on this point.

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Melchett
By thestudyman
22nd Jul 2020 08:58

I would be off the opinion that if the car is still in residence with the employee a BIK arises as the car is still available for use (albeit for private purposes).

HMRC may be flexible in these times - if there is a firm policy for all company car employees not to use their cars for private and proof is provided, they could accept this. But this is worth double checking with them.

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By CazzyT
22nd Jul 2020 14:13

https://www.gov.uk/guidance/how-to-treat-certain-expenses-and-benefits-p...

As mentioned above, the guidance says the keys and where possible the car ought to have been returned otherwise the vehicle is "available".

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By Paul D Utherone
22nd Jul 2020 18:07

I was in the same boat, in that until I returned the car in July it had sat on my drive since March. It was however still available to me for private use and did end up being driven about 30 miles once, just to turn the engine over.

As others have said, unless the keys were handed back (as a minimum) so that the car was not available to use, then regardless of the fact that they sat going nowhere I would go with "still available & a BIK"

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John Stokdyk, AccountingWEB head of insight
By John Stokdyk
23rd Jul 2020 16:56

This has been a recurring issue that cropped up in Kate Upcraft's P11D webinar in June.
https://www.accountingweb.co.uk/tax/business-tax/avoid-p11d-meltdown-wit...

Wilson and thestudyman are right that there have been a lot of discussions with the fleet community, but at the time of the webinar, Kate said the only statement from HMRC about benefits in kind on company cars was that the only acceptable situation for it not to be a benefit in kind was if the keys were returned and the contract cancelled. If contract hasn’t been cancelled, the employee will have to wait 30 days before that benefit ceases.

So it may be a case of having to wait to find out how flexible HMRC is willing to be. Good luck with that...

Meanwhile, if you have a taste for more of the same, you can catch up with Kate's next Payroll Unplugged webinar on salary sacrifice at 1pm on Friday (or on demand after that):
https://www.accountingweb.co.uk/opra-aka-salary-sacrifice-are-you-gettin...

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