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Single director shareholder never uses company car for personal journeys. Can he avoid BIK charge?

Single director shareholder never uses company...

Single director shareholder has company car which is used 100% for business but kept near home. Always uses girlfriend's car for personal journeys. Contract prohibits personal use of company car. What are the chances HMRC will accept it is not available for private use?


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21st May 2012 17:40

Try these

Doesn't sound an easy one for you as no proof that he just uses the car for business. What does his insurance document say, and what does the lease contract say?

Is it the case that he works from home? Does he keep a mileage log for car?

None of these ideas might work but you never know.


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21st May 2012 18:00

Horses mouth

Have a look at HMRC's EI manual. it's a 2fold rule, ie legal prohibition from private use and actual no private use.  In a sole-director company I'd say the first would be most difficult to establish, because the director could change it, but you say a contract prohibits private use, so maybe s/he's covered this?

Unless others come back with specific experience of this, I would get HMRC's approval first, ie don't trust to luck.

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21st May 2012 18:20

even one mile

the records need not only to be scrupulous but you need to be sure he completely understands what is and is not a private journey. HMRC would only need to find one little trip where they could say there was a private purpose (perhaps one where he combined a business call with a predominantly private trip) and they will be able to charge the full charge. For example, what if the girlfriend's car was off the road and there was a domestic emergency of some kind? 

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By chatman
21st May 2012 18:28

Don't think he'll get away with it.

Thanks everyone; that has been very helpful. I can't believe HMRC would approve it before-hand even if it was OK. The client does work from home, but he is useless at record keeping, so I don't think he could carry it off. I don't think I'll even try.

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