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Van damaged during private use

Van damaged during private use

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Good afternoon,

The employee parks his company van at a private event and finds it with scratched paint and a dent on his return. Is he liable to pay personally for the repairs or does the BIK on private use cover this? Or is it down to company policy?

Any ideas appreciated!

Replies (20)

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Hallerud at Easter
By DJKL
16th Sep 2015 17:29

Surely company policy. 

You need to split the thought process of tax position and liability, the tax position is surely a red herring,his liability is surely as agreed and I suspect, in the absence of agreement, it is the company's cost and they need to make the call re an insurance claim or otherwise.

Of course if the agreement says it is his liability but the company pays it that appears to itself be remuneration subject to paye etc, nothing to do with van benefits, the company has paid for an employee's cost/liability.

 

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RLI
By lionofludesch
16th Sep 2015 17:35

Prima facie

Assuming the company accepts the employee's explanation, it is the company's cost and may or may not be covered by insurance.

Imho, if the employee does pay for the damage, that should be deducted from any benefit in kind charge.

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By Phil Yaboots
16th Sep 2015 18:14

Memory

lionofludesch wrote:

Imho, if the employee does pay for the damage, that should be deducted from any benefit in kind charge.

Is that right? I'm not familiar with BIK for vans but always understood that, for car benefit, deduction was only available where it was a contribution towards private use. Maybe my memory playing tricks!

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RLI
By lionofludesch
16th Sep 2015 19:10

What else ?

And what else would it be ?

The tone of the OP implies that this charge is (maybe) to be made because the van was being used for private purposes.

Mind you, if I was the employee, my employer would soon get an earful.  But if the employee does consent to payment, I certainly don't think it should come out of his taxed income.

How much are we talking about ?

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By Phil Yaboots
16th Sep 2015 20:32

Not

lionofludesch wrote:

And what else would it be ?

It's not prima facie a payment for private use but, as I say, it's a long while since I looked at this in the context of cars and I've never studied the van provisions.

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By Chipette
16th Sep 2015 19:38

A few more facts

Sorry it gets a bit more complicated...

The employee used the van to go to a private party at the weekend (not for work). When he returned to his van there was a note with contact details from a gentleman saying he was sorry and happy to participate towards costs of repairs as long as this was settled outside the insurance. 

The settlement outside the insurance was agreed with the employer, the employee got a quote for under £200 and the gentleman agreed to pay half. 

No formal agreement regarding use of van.

My initial thoughts were if the employee is liable, he pays the bill (less amount paid by third party). Now if the employer pays the bill what happens with the third party payment?

No money has been paid or received yet.

 

 

 

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RLI
By lionofludesch
17th Sep 2015 10:21

Staggered

Chipette wrote:

Sorry it gets a bit more complicated...

The employee used the van to go to a private party at the weekend (not for work). When he returned to his van there was a note with contact details from a gentleman saying he was sorry and happy to participate towards costs of repairs as long as this was settled outside the insurance. 

The settlement outside the insurance was agreed with the employer, the employee got a quote for under £200 and the gentleman agreed to pay half. 

No formal agreement regarding use of van.

My initial thoughts were if the employee is liable, he pays the bill (less amount paid by third party). Now if the employer pays the bill what happens with the third party payment?

No money has been paid or received yet.

I'm staggered.  The employee is not at fault yet accepts half of the cost of damages ?

Why ?

Not to mention that it's not his place to make or accept offers at all as he doesn't own the van.

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By Jackie0802
16th Sep 2015 20:39

Depends

Entirely on the terms and conditions of employment.  If it addresses company property/vehicle then that is where you will find your answer. If the employment contract is silent then the liability rests with the employer.  If you are handing your employees expensive assets, for whatever reason, you need to set out the conditions of use at the outset, you can't make it up as you go along.  Anyone who drives a vehicle knows that accidents might happen, that's why we have insurance.  There is an assumption that the company and their insurers takes responsibility for wear, tear, maintenance and accidental damage.  If you want different terms you have to lay it out before the event, not haggle over it afterwards.

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By Paul D Utherone
16th Sep 2015 22:11

What does the
Insurance policy policy cover and what is the employment agreement as to who is responsible for the excess?

Surely it will be a claim on the insurance and down to the agreement between firm and employee as to who is responsible for the excess?

If the firm was silly enough not to have an agreement in place - say that the employee is responsible for the excess but will be refunded in a no fault situation where the insurance company recovers from the third party but otherwise it's the employees responsibility - then it's a matter of negotiation, but I cannot see that it has anything to do with tax and BIK

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By Anne Robinson
17th Sep 2015 11:01

Employer not employee
I think the OP said that it was the employer agreed to the 3rd parties suggestion that they would not go through insurance - not the employee.
The one thing we don't know is if the employee had permission to use the van in the manner in which he used it.

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RLI
By lionofludesch
17th Sep 2015 12:34

Possibly

Yes - that's a possible interpretation of what was said.

So - if the employer agrees to accept half, surely that's his problem.  He's still entitled to the full amount so why would be be trying to reclaim the other half from the employee victim ?

Sounds like an illegal wage deduction to me.

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By Mature Student
18th Sep 2015 11:51

Still don't get it ...

May be my Scottish nature, but if someone damages something valuable I own, then they pay the full cost to repair the item back to at least the condition it was in before the incident. Why are the company only wanting the gentleman who damaged the van to pay half the cost of repair?

Methinks there's at least one piece of this puzzle missing (usually under the sofa ;-) )

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RLI
By lionofludesch
18th Sep 2015 12:11

Yorkshire

Mature Student wrote:

May be my Scottish nature, but if someone damages something valuable I own, then they pay the full cost to repair the item back to at least the condition it was in before the incident. Why are the company only wanting the gentleman who damaged the van to pay half the cost of repair?

Methinks there's at least one piece of this puzzle missing (usually under the sofa ;-) )

I'm from Yorkshire and I don't get it either.

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By SteLacca
18th Sep 2015 12:13

I am equally astounded at the acceptance by the employer of half the cost, given the fault was entirely the other parties. If that had been offered to me my response would have been to pick the phone up to the insurance company.

Nevertheless, the employer has agreed to this, and so it's the employer's liability. If they push it, employee could threaten court. I'm sure the employer and the other party would not want to be caught failing to report an accident.

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By Tim Vane
18th Sep 2015 14:53

Caught failing to report an accident? There is no obligation to report accident damage to anybody other than the third party, and that obligation has been complied with. If there was injury suffered then the incident needs to be reported to the police, but here that is not the case.

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By Tim Vane
18th Sep 2015 14:54

Unless you mean reporting to the insurers? Not sure of the obligations there - presumably depends on the relevant policy terms.

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By SteLacca
18th Sep 2015 14:58

I was thinking of the insurers. Every policy I've had has required accidents to be reported, even if there's no claim to be made.

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By Tim Vane
18th Sep 2015 15:04

Yes I think you are right. Good point.

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RLI
By lionofludesch
18th Sep 2015 15:14

Correct

SteLacca's right.

You should report it even if not at fault and no claim's made.  All to do with risk.

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By paywatch
18th Sep 2015 15:29

Going back to the potential BiK tax charge

When the benefit of a van is charged under Section 154 ITEPA 2003, or where it is not charged because private use in the year is insignificant, Section 202(1) ITEPA 2003 excludes it from the residual liability to charge in Part 3 Chapter 10.

There is also no residual liability to charge on any benefit in connection with the van other than where fuel is provided for a van for which the restricted private use condition is not met or exceptionally, expenses are incurred by or on behalf of the employer in providing a driver for the van, so a benefit charge cannot also be made on the provision of, for example, insurance for the van.

There is also legislation forbidding any charge under other employment income provisions in addition to the van benefit charge for:

the discharge of any liability of the employee in connection with the van - Section 239(1)) ITEPA 2003the reimbursement of expenses incurred by the employee in connection with the van - Section 239(2)) ITEPA 2003

The taxable scale charge can be reduced for any payments that an employee is required to, and does actually make, prior to the end of the relevant tax year as a condition of the van being available for private use will reduce the cash equivalent value pound for pound. The benefit cannot be reduced to less than nil.However, payments for supplies or services, such as petrol or insurance, do not count.

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