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Pool car shared by two employers

Is it possible for two employers to share a pool car?

I have two clients, husband and wife, running two entirely separate Ltd Cos.  His business premises is adjacent to their home, hers is a shop some distance away.  He wishes to lease a vehicle to be used as a pool car, he understands the requirements, and would comply (no personal use, available to all staff, etc,) and there is a genuine need for such a vehicle. Even though business premises is adjacent to the home I think he would be OK, separate entrance, parking area, and so on. However he asks if the vehicle could occasionally be shared with his wife’s business (a charge would be made) for some long-distance trips to suppliers but I cannot see how it would meet all the criteria for that business as it would not be left overnight at her premises, but at his, and how would it be available to all her employees from that address?  However HMRC refers to ‘employers or groups of employers’ providing a pool car so it must be possible in some circumstances.  Would be grateful for any advice.

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07th Dec 2017 01:20

If the car is available for use by the wife then it's not a pool car. End of.

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to Tim Vane
07th Dec 2017 08:46

I disagree. imho, the wife's use would be treated as the husband's but that, in itself doesn't disqualify it.

However, I'm sceptical that you can make it work. How much use is made of the car by these unrelated staff members ?

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07th Dec 2017 10:44

I agree with Tim, because use by the wife (for the purposes of her business, or otherwise, and paid for, or otherwise) is PRIVATE use by the husband, and cannot be said to be merely incidental to the husband's other use. The test in s 167(3)(d) is thus failed.

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07th Dec 2017 11:39

I don’t agree that the wife's use is necessarily private use.

What we have here is 2 Ltd companies, Ltd H and Ltd W.

Ltd H has a company car, which from the question, seems to meet the necessary conditions to be a pool car.

Now, if the husband were simply to let his wife use it, then that would be private use, and the car would no longer qualify as a pool car in Ltd H.

What is suggested however is that Ltd W, not his wife, is provided with the use of the car, and will incur a charge for this use. His wife, as an employee/director of Ltd W, is then provided with this hire car, by Ltd W, to carry out business travel (trips to suppliers). I think the provision to Ltd W is significant, as it is no longer a car being provided to his wife, but rather charged out to a Ltd company.

If the only use of the hire car is the business trip, then there would be no benefit to her in Ltd W.

If the wife does use it personally, then a BIK would be calculated using the normal rules, and apportioned according to the time it was available to the employee.

So long as Ltd W actually hires the car from Ltd H, and there is evidence to back this up, then I’d be of the view that this does not compromise the pool car position in Ltd H, and the position in Ltd W is dependant on whether the car is just used for the business trips or not.

All that being said, I’d expect an inspector to show a keen interest in such an arrangement, and so would emphasise the need to record the hiring of the car, and to have an actual charge applied, rather than the wife simply nipping out in the car whenever she pleases.

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to KevinMcC
07th Dec 2017 12:17

That's a very lovely, and factually accurate, analysis Kevin

However, it ignores the effect of the deeming provisions in ITEPA 2003, s 118 (which deems use other than by the employees to be private use), and s 117 (which deems the availability for that use to be by reason of the husband's employment).

Whilst it comes to pass by a legitimate mechanism, the fact that the wife is the natural person using the car, is using the car otherwise than for the purposes of the business of H Ltd, and happens to be the spouse of H, means that s 117 and 118 operate to deem the car to be available for private use by reason of the husband's employment.

Unless, you think one of the exceptions in s 117(2) or (3) apply?

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to Portia Nina Levin
07th Dec 2017 13:49

I don’t think that s117 necessarily applies in the given circumstances.

s117(1) states “For the purposes of this Chapter a car or van made available by an employer to an employee or member of an employeeʼs family or household is to be regarded as made available by reason of the employment unless subsection (2) or (3) excludes the application of this subsection.”

My argument would be that the car is not being provided to the employee, or the employee’s family, it is being provided to Ltd W, which doesn’t get caught by s117(1). Therefore, the exceptions at (2) and (3) aren’t relevant (although I concede that they wouldn’t be met).

I also don’t think the deeming provision at s118 would be applicable either, as I don’t think that s118 is saying that “use other than by employees” is private use.

s118(2) states “In this Chapter “private use” , in relation to a car or van made available to an employee or a member of the employee's family or household, means any use other than for the employee's business travel (see section 171(1)).”

My view is that this section is merely determining what is private use in relation to the employee the car is made available to, rather than saying that any use of the car, not by employees on business travel, is private.

In believe this section is saying, where the employer provides a car to an employee, any use, by that employee, other than for business travel, is deemed to be private use for that employee.

So, the car can be used for other purposes (e.g. hiring it out), but when it comes to employees of Ltd H, any use the employee makes of the car, other than business travel, is deemed to be private use.

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to KevinMcC
07th Dec 2017 14:30

KevinMcC wrote:

My argument would be that the car is not being provided to the employee, or the employee’s family, it is being provided to Ltd W, which doesn’t get caught by s117(1).

So you have just decided to arbitrarily ignore the fact that the wife is a member of the employees family on the grounds that she is also something else, and thus conclude that the provision in s117 does not apply?

Good luck with that.

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to Tim Vane
07th Dec 2017 15:03

I'm not ignoring the fact that the wife is a member of H's family, it just isn't relevant as she is not being provided the car by Ltd H.

If Ltd H was providing the car to W then of course that would be relevant. But Ltd H is providing the car to Ltd W, not W.

It is Ltd W that is providing the car to W.

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to KevinMcC
07th Dec 2017 14:41

Your use of the term "provided" as if it is synonymous with "made available" is unhelpful though. The driving of the car by the wife ensues from somebody making it available to her to drive.

However, on a re-read, I concede that the deeming provisions do not apply. Not by your arguments, but by the fact that the person making the car available to W will be W Ltd, not H Ltd, and s 117 can only operate if the person doing the making available is the employer (ie H Ltd).

Were that not the case, I wouldn't agree with your s 118 point though, because my point was that "the employee", for the purpose of s 118, is H, by virtue of the s 117 deeming provision. However, that is academic given that I now accept that s 117 does not apply.

Accordingly, I do agree that with a suitable agreement between H Ltd and W Ltd, the wife's use would become irrelevant for the purposes of the tests in s 167 in relation to H Ltd.

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07th Dec 2017 16:13

I have to say - I've wouldn't like to trust any of my clients to keep decent records for this.

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07th Dec 2017 18:15

A massive thank you to everyone for their very detailed replies on this. I also had doubts that it could work in practice but was not 100% sure, your comments are most helpful, will advise client accordingly. What a brilliant resource this is.

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