Hi all,

I want to employ a sales person in Scotland, and our business is based
in London. We want to claim VAT on the purchase of the car, all fuel,
and also not have the sales person pay benefit in kind as the car will
be exclusively for business use. They will use the car to go and visit
different customers, as well as try and open new accounts.

To monitor this, a tracker will be fitted keeping a log of all car
movements, as well as terms written into the contract stipulating the
car is not for personal use. Insurance on the vehicle will be for
business use only, although the car of course will be parked at the
employee premises. A fuel card will be used which can only be used for
that numberplate of vehicle.

Does anyone have any experience in dealing with HMRC and satisfying
them of this requirement?

Thanks,
Raj

abd08 wrote:

> Does anyone have any experience in dealing with HMRC and satisfying
> them of this requirement?

I used to work for the Revenue as an Inspector some years ago, and I never 
came across a case where anyone managed to persuade them that there was no 
private use whatever. I suggest that your best course is to try and agree a 
realistic minimum private use, and move on.

-- 
Facts are sacred ... but comment is free

On 3 Nov, 09:26, Robin T Cox  wrote:
> abd08 wrote:
> > Does anyone have any experience in dealing with HMRC and satisfying
> > them of this requirement?
>
> I used to work for the Revenue as an Inspector some years ago, and I never
> came across a case where anyone managed to persuade them that there was no
> private use whatever. I suggest that your best course is to try and agree a
> realistic minimum private use, and move on.
>
The tax effect is crippling even using minimal private use.

>> I used to work for the Revenue as an Inspector some years ago, and I
>> never came across a case where anyone managed to persuade them that
>> there was no private use whatever.

IIRC it was achieved in rare cases but the circumstances were pretty 
extreme.  And I'd expect HMRC to still have the precedent papers in a 
locked filing cabinet stuck in a disused lavatory with a sign on the 
door saying "Beware of The Leopard".

Can the OP confirm that when he says "the car will be parked at the 
employee premises" he means where the employee lives?  If so the first 
one big hurdle, IIRC,  is proving that the employee has no permanent 
workplace (or none he visits in the car).  Otherwise there'll be use of 
the car for ordinary commuting which is private use of the car = bang to 
rights 'guv.
-- 
R

"neverwas"  wrote in message 
news:Y9VHm.1271$Ym4.303@text.news.virginmedia.com...
>>> I used to work for the Revenue as an Inspector some years ago, and I
>>> never came across a case where anyone managed to persuade them that
>>> there was no private use whatever.
>
> IIRC it was achieved in rare cases but the circumstances were pretty 
> extreme.  And I'd expect HMRC to still have the precedent papers in a 
> locked filing cabinet stuck in a disused lavatory with a sign on the door 
> saying "Beware of The Leopard".
>
> Can the OP confirm that when he says "the car will be parked at the 
> employee premises" he means where the employee lives?  If so the first one 
> big hurdle, IIRC,  is proving that the employee has no permanent workplace 
> (or none he visits in the car).  Otherwise there'll be use of the car for 
> ordinary commuting which is private use of the car = bang to rights 'guv.
Someone who works from home?

"Robin T Cox"  wrote in message 
news:LGSHm.50334$MG6.5194@newsfe13.ams2...
> abd08 wrote:
>
>> Does anyone have any experience in dealing with HMRC and satisfying
>> them of this requirement?
>
> I used to work for the Revenue as an Inspector some years ago, and I never
> came across a case where anyone managed to persuade them that there was no
> private use whatever. I suggest that your best course is to try and agree 
> a
> realistic minimum private use, and move on.

It doesn't work that way

as soon as there is a single mile of private use you pay the full tax charge 
for "private use".

tim

>Someone who works from home?

Yep.  But better if it is someone whose home is the *only* normal place 
of work.  So eg the OP needs to watch the position of eg the London 
base. Will the sales person visit London regularly/routinely? If so, 
will the car be available for that travel?  Ditto for any regional 
office etc.  I've wandered over to the EIM and 
http://www.hmrc.gov.uk/manuals/eimanual/EIM23082.htm seems to cover the 
ground.

But I'd have thought it was still worth the employer running the 
arrangement past the employer's PAYE office (or whatever they are called 
these days) before putting (or not putting in!) the first P11D.


-- 
R

"neverwas"  wrote in message
news:tZVHm.1280$Ym4.45@text.news.virginmedia.com...
> >Someone who works from home?
>
> Yep.  But better if it is someone whose home is the *only* normal place of
> work.  So eg the OP needs to watch the position of eg the London base.
> Will the sales person visit London regularly/routinely? If so, will the
> car be available for that travel?  Ditto for any regional office etc.
> I've wandered over to the EIM and
> http://www.hmrc.gov.uk/manuals/eimanual/EIM23082.htm seems to cover the
> ground.
>
> But I'd have thought it was still worth the employer running the
> arrangement past the employer's PAYE office (or whatever they are called
> these days) before putting (or not putting in!) the first P11D.
>


Agreed.  HMRC has always emphasised the need to avoid any "availability" for
private use in order to ensure no taxable benefit arises.

But the OP's proposals seem to cover that fairly exhaustively (though I
hadn't imagined it was possible to get business-only insurance cover).

That said, I think the proposal is silly.  I'd be inclined to make it a
requirement for the salesman to provide a suitable car (as approved by the
employer), and then pay a car allowance (taxable) plus mileage at 40p/25p
(non taxable).

The clever bit is to tweak the car allowance regularly (eg quarterly), such 
that on a cumulative basis it covers those (agreed) fixed costs which the 
"mileage payments minus variable costs/mile" don't cover.

-- 
Martin

"neverwas"  wrote in message
news:tZVHm.1280$Ym4.45@text.news.virginmedia.com...
> >Someone who works from home?
>
> Yep.  But better if it is someone whose home is the *only* normal place of
> work.  So eg the OP needs to watch the position of eg the London base.
> Will the sales person visit London regularly/routinely? If so, will the
> car be available for that travel?  Ditto for any regional office etc.
> I've wandered over to the EIM and
> http://www.hmrc.gov.uk/manuals/eimanual/EIM23082.htm seems to cover the
> ground.
>
> But I'd have thought it was still worth the employer running the
> arrangement past the employer's PAYE office (or whatever they are called
> these days) before putting (or not putting in!) the first P11D.
>


Agreed.  HMRC has always emphasised the need to avoid any "availability" for
private use in order to ensure no taxable benefit arises.

But the OP's proposals seem to cover that fairly exhaustively (though I
hadn't imagined it was possible to get business-only insurance cover).

That said, I think the proposal is silly.  I'd be inclined to make it a
requirement for the salesman to provide a suitable car (as approved by the
employer), and then pay a car allowance (taxable) plus mileage at 40p/25p
(non taxable).

The clever bit is to tweak the car allowance regularly (eg quarterly), such 
that on a cumulative basis it covers those (agreed) fixed costs which the 
"mileage payments minus variable costs/mile" don't cover.

-- 
Martin

"neverwas"  wrote in message
news:tZVHm.1280$Ym4.45@text.news.virginmedia.com...
> >Someone who works from home?
>
> Yep.  But better if it is someone whose home is the *only* normal place of
> work.  So eg the OP needs to watch the position of eg the London base.
> Will the sales person visit London regularly/routinely? If so, will the
> car be available for that travel?  Ditto for any regional office etc.
> I've wandered over to the EIM and
> http://www.hmrc.gov.uk/manuals/eimanual/EIM23082.htm seems to cover the
> ground.
>
> But I'd have thought it was still worth the employer running the
> arrangement past the employer's PAYE office (or whatever they are called
> these days) before putting (or not putting in!) the first P11D.
>


Agreed.  HMRC has always emphasised the need to avoid any "availability" for
private use in order to ensure no taxable benefit arises.

But the OP's proposals seem to cover that fairly exhaustively (though I
hadn't imagined it was possible to get business-only insurance cover).

That said, I think the proposal is silly.  I'd be inclined to make it a
requirement for the salesman to provide a suitable car (as approved by the
employer), and then pay a car allowance (taxable) plus mileage at 40p/25p
(non taxable).

The clever bit is to tweak the car allowance regularly (eg quarterly), such 
that on a cumulative basis it covers those (agreed) fixed costs which the 
"mileage payments minus variable costs/mile" don't cover.

-- 
Martin

"Martin"  wrote in message 
news:BjWHm.30616$7Y2.16385@newsfe27.ams2...

Oh bu**er - what happened there...?  Humble apologies.

-- 
Martin

Martin wrote:

> That said, I think the proposal is silly.  I'd be inclined to make it a
> requirement for the salesman to provide a suitable car (as approved by the
> employer), and then pay a car allowance (taxable) plus mileage at 40p/25p
> (non taxable).

Agreed.  But suppose the salesman can't afford to buy a suitable car, and
has insufficient good credit with which to raise a loan in his own name.
Could the employer lend him the money without it counting as a taxable
benefit (other than, of course, to the extent that the salesman doesn't
pay the employer a market rate of interest for the loan)?

> The clever bit is to tweak the car allowance regularly (eg quarterly),
> such that on a cumulative basis it covers those (agreed) fixed costs which
> the "mileage payments minus variable costs/mile" don't cover.

If a loan as above has been given, the allowance should also cover the
agreed proportion of the capital repayments.

> That said, I think the proposal is silly.  I'd be inclined to make it
> a requirement for the salesman to provide a suitable car (as approved
> by the employer), and then pay a car allowance (taxable) plus mileage
> at 40p/25p (non taxable).
>
Good point.  (I assume this is still much more tax- and NIC-efficient 
for most high-mileage drivers than the CO2-biased company car charges.)

But then again, might the company car proposal be designed to get the 
salesperson to accept the tracking device, so the employer then gets 
(purely as a side effect you understand) the ability to monitor just 
where the employee goes and when? If not, I offer it as a "cunning 
plan"; and only ask in return where can I collect my giant turnip?

> Oh bu**er - what happened there...?  Humble apologies.

Nice to see old habits like submission in triplicate are not totally 
gone :))
-- 
R

"Ronald Raygun" <no.spam@localhost.localdomain> wrote in message 
news:IZWHm.1302$Ym4.1152@text.news.virginmedia.com...
> Martin wrote:
>
>> That said, I think the proposal is silly.  I'd be inclined to make it a
>> requirement for the salesman to provide a suitable car (as approved by 
>> the
>> employer), and then pay a car allowance (taxable) plus mileage at 40p/25p
>> (non taxable).
>
> Agreed.  But suppose the salesman can't afford to buy a suitable car, and
> has insufficient good credit with which to raise a loan in his own name.

In that case, I wouldn't want to employ him.  A good salesman, to be trusted 
to work a territory remotely (Scotland to boot...;-) ) would surely be 
credit-worthy?

> Could the employer lend him the money without it counting as a taxable
> benefit (other than, of course, to the extent that the salesman doesn't
> pay the employer a market rate of interest for the loan)?

No.

>> The clever bit is to tweak the car allowance regularly (eg quarterly),
>> such that on a cumulative basis it covers those (agreed) fixed costs 
>> which
>> the "mileage payments minus variable costs/mile" don't cover.
>
> If a loan as above has been given, the allowance should also cover the
> agreed proportion of the capital repayments.

No - that's only applies for MPs expenses.

The interest (and depreciation) would be part of the fixed costs, used to 
calculate the allowance.


-- 
Martin

"neverwas"  wrote in message
news:26XHm.1306$Ym4.442@text.news.virginmedia.com...
>> That said, I think the proposal is silly.  I'd be inclined to make it
>> a requirement for the salesman to provide a suitable car (as approved
>> by the employer), and then pay a car allowance (taxable) plus mileage
>> at 40p/25p (non taxable).
>>
> Good point.  (I assume this is still much more tax- and NIC-efficient for
> most high-mileage drivers than the CO2-biased company car charges.)

I've not done the sums but, like you, I assume it is.

> But then again, might the company car proposal be designed to get the
> salesperson to accept the tracking device, so the employer then gets
> (purely as a side effect you understand) the ability to monitor just where
> the employee goes and when? If not, I offer it as a "cunning plan"; and
> only ask in return where can I collect my giant turnip?

Good one.  Not thought of that.  I'm sorry, we carved a hideous face on our
last remaining turnip on Saturday, under the misapprehension it was a
pumpkin......


>
>> Oh bu**er - what happened there...?  Humble apologies.
>
> Nice to see old habits like submission in triplicate are not totally gone
> :))

Tee hee.

Actually, it wasn't me - it was either the 'pooter, OE (yes, I know that's
very last century), or the ISP.


-- 
Martin

Martin wrote:

> "Ronald Raygun" <no.spam@localhost.localdomain> wrote in message
> news:IZWHm.1302$Ym4.1152@text.news.virginmedia.com...
>>
>> suppose the salesman can't afford to buy a suitable car, and
>> has insufficient good credit with which to raise a loan in his own name.
> 
> In that case, I wouldn't want to employ him.  A good salesman, to be
> trusted to work a territory remotely (Scotland to boot...;-) ) would
> surely be credit-worthy?

Perhaps, perhaps not.  A good salesman is measured by results, not
creditworthiness.

>> Could the employer lend him the money without it counting as a taxable
>> benefit (other than, of course, to the extent that the salesman doesn't
>> pay the employer a market rate of interest for the loan)?
> 
> No.

Why not?  And specifically, how exactly would it be assessed?  As a salary
advance?

On Mon, 2 Nov 2009 14:56:27 -0800 (PST), abd08 wrote:
> Hi all,
>
> I want to employ a sales person in Scotland, and our business is based
> in London. We want to claim VAT on the purchase of the car, all fuel,
> and also not have the sales person pay benefit in kind as the car will
> be exclusively for business use. They will use the car to go and visit
> different customers, as well as try and open new accounts.
>
> To monitor this, a tracker will be fitted keeping a log of all car
> movements, as well as terms written into the contract stipulating the
> car is not for personal use. Insurance on the vehicle will be for
> business use only, although the car of course will be parked at the
> employee premises. A fuel card will be used which can only be used for
> that numberplate of vehicle.
>
> Does anyone have any experience in dealing with HMRC and satisfying
> them of this requirement?
>
Would it be an easier "sell" if the salesperson was given a small van
instead of a car? Maybe having a logo on the side would help the case.

"Ronald Raygun" <no.spam@localhost.localdomain> wrote in message
news:x6YHm.1328$Ym4.1282@text.news.virginmedia.com...
> Martin wrote:
>
>> "Ronald Raygun" <no.spam@localhost.localdomain> wrote in message
>> news:IZWHm.1302$Ym4.1152@text.news.virginmedia.com...
>>>
>>> suppose the salesman can't afford to buy a suitable car, and
>>> has insufficient good credit with which to raise a loan in his own name.
>>
>> In that case, I wouldn't want to employ him.  A good salesman, to be
>> trusted to work a territory remotely (Scotland to boot...;-) ) would
>> surely be credit-worthy?
>
> Perhaps, perhaps not.  A good salesman is measured by results, not
> creditworthiness.

Precisely.  But if he has got the results (refer to his cv) surely he would 
be creditworthy?

>>> Could the employer lend him the money without it counting as a taxable
>>> benefit (other than, of course, to the extent that the salesman doesn't
>>> pay the employer a market rate of interest for the loan)?
>>
>> No.
>
> Why not?

Cos a loan to an employee is a taxable benefit.

> And specifically, how exactly would it be assessed?

As a taxable benefit ("beneficial loan") - unless <=£5k max.

> As a salary advance?

No - that's a loan too.

-- 
Martin

"Martin"  wrote in message 
news:u7ZHm.83089$R52.18664@newsfe24.ams2...
>
> "Ronald Raygun" <no.spam@localhost.localdomain> wrote in message
> news:x6YHm.1328$Ym4.1282@text.news.virginmedia.com...
>> Martin wrote:
>>
>>> "Ronald Raygun" <no.spam@localhost.localdomain> wrote in message
>>> news:IZWHm.1302$Ym4.1152@text.news.virginmedia.com...
>>>>
>>>> suppose the salesman can't afford to buy a suitable car, and
>>>> has insufficient good credit with which to raise a loan in his own 
>>>> name.
>>>
>>> In that case, I wouldn't want to employ him.  A good salesman, to be
>>> trusted to work a territory remotely (Scotland to boot...;-) ) would
>>> surely be credit-worthy?
>>
>> Perhaps, perhaps not.  A good salesman is measured by results, not
>> creditworthiness.
>
> Precisely.  But if he has got the results (refer to his cv) surely he 
> would be creditworthy?
>
>>>> Could the employer lend him the money without it counting as a taxable
>>>> benefit (other than, of course, to the extent that the salesman doesn't
>>>> pay the employer a market rate of interest for the loan)?
>>>
>>> No.
>>
>> Why not?
>
> Cos a loan to an employee is a taxable benefit.

You said yourself that this isn't always the case.

tim

"pete"  wrote in message 
news:slrnhf0mhb.un4.no-one@corv.local...
> On Mon, 2 Nov 2009 14:56:27 -0800 (PST), abd08 wrote:
>> Hi all,
>>
>> I want to employ a sales person in Scotland, and our business is based
>> in London. We want to claim VAT on the purchase of the car, all fuel,
>> and also not have the sales person pay benefit in kind as the car will
>> be exclusively for business use. They will use the car to go and visit
>> different customers, as well as try and open new accounts.
>>
>> To monitor this, a tracker will be fitted keeping a log of all car
>> movements, as well as terms written into the contract stipulating the
>> car is not for personal use. Insurance on the vehicle will be for
>> business use only, although the car of course will be parked at the
>> employee premises. A fuel card will be used which can only be used for
>> that numberplate of vehicle.
>>
>> Does anyone have any experience in dealing with HMRC and satisfying
>> them of this requirement?
>>
> Would it be an easier "sell" if the salesperson was given a small van
> instead of a car? Maybe having a logo on the side would help the case.

Because of abuse like this the rules about vans are being equalised towards 
cars

tim

Martin wrote:

> "Ronald Raygun" <no.spam@localhost.localdomain> wrote in message
> news:x6YHm.1328$Ym4.1282@text.news.virginmedia.com...
>> Martin wrote:
>>> "Ronald Raygun" <no.spam@localhost.localdomain> wrote in message
>>> news:IZWHm.1302$Ym4.1152@text.news.virginmedia.com...
>>>>
>>>> suppose the salesman can't afford to buy a suitable car, and
>>>> has insufficient good credit with which to raise a loan in his own
>>>> name.
>>>
>>> In that case, I wouldn't want to employ him.  A good salesman, to be
>>> trusted to work a territory remotely (Scotland to boot...;-) ) would
>>> surely be credit-worthy?
>>
>> Perhaps, perhaps not.  A good salesman is measured by results, not
>> creditworthiness.
> 
> Precisely.  But if he has got the results (refer to his cv) surely he
> would be creditworthy?

I don't understand why you think that should necessarily follow.  Good
results should imply good remuneration, but it boils down to how he
spends his income.  Indeed I would have thought a salesman, particularly
a high flyer, would stand an above average chance of living a bit on the
wild side, perhaps having gambling habits, and credit maxed out etc.

>>>> Could the employer lend him the money without it counting as a taxable
>>>> benefit (other than, of course, to the extent that the salesman doesn't
>>>> pay the employer a market rate of interest for the loan)?
>>>
>>> No.
>>
>> Why not?
> 
> Cos a loan to an employee is a taxable benefit.

Certainly, but is the taxable value of that benefit not just the interest
the employee would have to pay if he got the loan commercially?

"tim...."  wrote in message
news:7lb8j5F3celnrU1@mid.individual.net...
>
> "Martin"  wrote in message
> news:u7ZHm.83089$R52.18664@newsfe24.ams2...
>>
>> "Ronald Raygun" <no.spam@localhost.localdomain> wrote in message
>> news:x6YHm.1328$Ym4.1282@text.news.virginmedia.com...
>>> Martin wrote:
>>>
>>>> "Ronald Raygun" <no.spam@localhost.localdomain> wrote in message
>>>> news:IZWHm.1302$Ym4.1152@text.news.virginmedia.com...
>>>>>
>>>>> suppose the salesman can't afford to buy a suitable car, and
>>>>> has insufficient good credit with which to raise a loan in his own
>>>>> name.
>>>>
>>>> In that case, I wouldn't want to employ him.  A good salesman, to be
>>>> trusted to work a territory remotely (Scotland to boot...;-) ) would
>>>> surely be credit-worthy?
>>>
>>> Perhaps, perhaps not.  A good salesman is measured by results, not
>>> creditworthiness.
>>
>> Precisely.  But if he has got the results (refer to his cv) surely he
>> would be creditworthy?
>>
>>>>> Could the employer lend him the money without it counting as a taxable
>>>>> benefit (other than, of course, to the extent that the salesman
>>>>> doesn't
>>>>> pay the employer a market rate of interest for the loan)?
>>>>
>>>> No.
>>>
>>> Why not?
>>
>> Cos a loan to an employee is a taxable benefit.
>
> You said yourself that this isn't always the case.


What are you referring to - the few exceptions (which I didn't mention - how 
do you consider these might apply in this case?) or my reference to £5k 
which you snipped (maybe you think salesmen's cars shouldn't cost more than 
£5k) ?

-- 
Martin

"Ronald Raygun" <no.spam@localhost.localdomain> wrote in message 
news:v6_Hm.1376$Ym4.219@text.news.virginmedia.com...
> Martin wrote:
>
>> "Ronald Raygun" <no.spam@localhost.localdomain> wrote in message
>> news:x6YHm.1328$Ym4.1282@text.news.virginmedia.com...
>>> Martin wrote:
>>>> "Ronald Raygun" <no.spam@localhost.localdomain> wrote in message
>>>> news:IZWHm.1302$Ym4.1152@text.news.virginmedia.com...
>>>>>
>>>>> suppose the salesman can't afford to buy a suitable car, and
>>>>> has insufficient good credit with which to raise a loan in his own
>>>>> name.
>>>>
>>>> In that case, I wouldn't want to employ him.  A good salesman, to be
>>>> trusted to work a territory remotely (Scotland to boot...;-) ) would
>>>> surely be credit-worthy?
>>>
>>> Perhaps, perhaps not.  A good salesman is measured by results, not
>>> creditworthiness.
>>
>> Precisely.  But if he has got the results (refer to his cv) surely he
>> would be creditworthy?
>
> I don't understand why you think that should necessarily follow.  Good
> results should imply good remuneration, but it boils down to how he
> spends his income.  Indeed I would have thought a salesman, particularly
> a high flyer, would stand an above average chance of living a bit on the
> wild side, perhaps having gambling habits, and credit maxed out etc.

Maybe - but I wouldn't want him and his distractions on my payroll.


>>>>> Could the employer lend him the money without it counting as a taxable
>>>>> benefit (other than, of course, to the extent that the salesman 
>>>>> doesn't
>>>>> pay the employer a market rate of interest for the loan)?
>>>>
>>>> No.
>>>
>>> Why not?
>>
>> Cos a loan to an employee is a taxable benefit.
>
> Certainly, but is the taxable value of that benefit not just the interest
> the employee would have to pay if he got the loan commercially?

Not quite.  HMRC publish the rates to apply - currently 4.75%.  You'd be 
doing well to get a car loan at that rate, I imagine.


-- 
Martin

Martin wrote:

> "Ronald Raygun" <no.spam@localhost.localdomain> wrote
>> Martin wrote:
>>> "Ronald Raygun" <no.spam@localhost.localdomain> wrote
>>>> Martin wrote:
>>>>> "Ronald Raygun" <no.spam@localhost.localdomain> wrote
>>>>>>
>>>>>> Could the employer lend him the money without it counting as a
>>>>>> taxable benefit (other than, of course, to the extent that the
>>>>>> salesman doesn't
>>>>>> pay the employer a market rate of interest for the loan)?
>>>>>
>>>>> No.
>>>>
>>>> Why not?
>>>
>>> Cos a loan to an employee is a taxable benefit.
>>
>> Certainly, but is the taxable value of that benefit not just the interest
>> the employee would have to pay if he got the loan commercially?
> 
> Not quite.  HMRC publish the rates to apply - currently 4.75%.  You'd be
> doing well to get a car loan at that rate, I imagine.

Looks like a bloody good deal, then.  And if the employee does in fact pay
interest to the employer at said rate, the taxable benefit is NIL.  That's
more or less what I said, isn't it?

"Ronald Raygun" <no.spam@localhost.localdomain> wrote in message 
news:iz_Hm.1383$Ym4.304@text.news.virginmedia.com...
> Martin wrote:
>
>> "Ronald Raygun" <no.spam@localhost.localdomain> wrote
>>> Martin wrote:
>>>> "Ronald Raygun" <no.spam@localhost.localdomain> wrote
>>>>> Martin wrote:
>>>>>> "Ronald Raygun" <no.spam@localhost.localdomain> wrote
>>>>>>>
>>>>>>> Could the employer lend him the money without it counting as a
>>>>>>> taxable benefit (other than, of course, to the extent that the
>>>>>>> salesman doesn't
>>>>>>> pay the employer a market rate of interest for the loan)?
>>>>>>
>>>>>> No.
>>>>>
>>>>> Why not?
>>>>
>>>> Cos a loan to an employee is a taxable benefit.
>>>
>>> Certainly, but is the taxable value of that benefit not just the 
>>> interest
>>> the employee would have to pay if he got the loan commercially?
>>
>> Not quite.  HMRC publish the rates to apply - currently 4.75%.  You'd be
>> doing well to get a car loan at that rate, I imagine.
>
> Looks like a bloody good deal, then.  And if the employee does in fact pay
> interest to the employer at said rate, the taxable benefit is NIL.  That's
> more or less what I said, isn't it?

It is indeed - well remembered ;-)

I didn't comment at the time (well - you mentioned it in parenthesis, after 
all).  But I don't reckon the OP should "go there", as they say.  Would you 
lend money to a salesman who's 400+ miles away, working in isolation, and 
isn't even creditworthy....? :-)

Furthermore, the company has to pay 1A NICS... :-(


-- 
Martin

"Martin"  wrote in message 
news:ic_Hm.26134$ep1.4438@newsfe30.ams2...
>
> "tim...."  wrote in message
> news:7lb8j5F3celnrU1@mid.individual.net...
>>
>> "Martin"  wrote in message
>> news:u7ZHm.83089$R52.18664@newsfe24.ams2...
>>>
>>> "Ronald Raygun" <no.spam@localhost.localdomain> wrote in message
>>> news:x6YHm.1328$Ym4.1282@text.news.virginmedia.com...
>>>> Martin wrote:
>>>>
>>>>> "Ronald Raygun" <no.spam@localhost.localdomain> wrote in message
>>>>> news:IZWHm.1302$Ym4.1152@text.news.virginmedia.com...
>>>>>>
>>>>>> suppose the salesman can't afford to buy a suitable car, and
>>>>>> has insufficient good credit with which to raise a loan in his own
>>>>>> name.
>>>>>
>>>>> In that case, I wouldn't want to employ him.  A good salesman, to be
>>>>> trusted to work a territory remotely (Scotland to boot...;-) ) would
>>>>> surely be credit-worthy?
>>>>
>>>> Perhaps, perhaps not.  A good salesman is measured by results, not
>>>> creditworthiness.
>>>
>>> Precisely.  But if he has got the results (refer to his cv) surely he
>>> would be creditworthy?
>>>
>>>>>> Could the employer lend him the money without it counting as a 
>>>>>> taxable
>>>>>> benefit (other than, of course, to the extent that the salesman
>>>>>> doesn't
>>>>>> pay the employer a market rate of interest for the loan)?
>>>>>
>>>>> No.
>>>>
>>>> Why not?
>>>
>>> Cos a loan to an employee is a taxable benefit.
>>
>> You said yourself that this isn't always the case.
>
>
> What are you referring to - the few exceptions (which I didn't mention - 
> how do you consider these might apply in this case?) or my reference to 
> £5k which you snipped (maybe you think salesmen's cars shouldn't cost more 
> than £5k) ?

Yes the 5k.

No I don't expect that, in general, a salesmen's car should cost less than 
5K.  But ISTM that if said salesman is so strapped that he cant get a loan 
on his own, a 5K car seems about all he should be driving.

tim

On Nov 3, 8:31 pm, "tim...."  wrote:
> "Martin"  wrote in message
>
> news:ic_Hm.26134$ep1.4438@newsfe30.ams2...
>
>
>
>
>
> > "tim...."  wrote in message
> >news:7lb8j5F3celnrU1@mid.individual.net...
>
> >> "Martin"  wrote in message
> >>news:u7ZHm.83089$R52.18664@newsfe24.ams2...
>
> >>> "Ronald Raygun" <no.s...@localhost.localdomain> wrote in message
> >>>news:x6YHm.1328$Ym4.1282@text.news.virginmedia.com...
> >>>> Martin wrote:
>
> >>>>> "Ronald Raygun" <no.s...@localhost.localdomain> wrote in message
> >>>>>news:IZWHm.1302$Ym4.1152@text.news.virginmedia.com...
>
> >>>>>> suppose the salesman can't afford to buy a suitable car, and
> >>>>>> has insufficient good credit with which to raise a loan in his own
> >>>>>> name.
>
> >>>>> In that case, I wouldn't want to employ him.  A good salesman, to be
> >>>>> trusted to work a territory remotely (Scotland to boot...;-) ) would
> >>>>> surely be credit-worthy?
>
> >>>> Perhaps, perhaps not.  A good salesman is measured by results, not
> >>>> creditworthiness.
>
> >>> Precisely.  But if he has got the results (refer to his cv) surely he
> >>> would be creditworthy?
>
> >>>>>> Could the employer lend him the money without it counting as a
> >>>>>> taxable
> >>>>>> benefit (other than, of course, to the extent that the salesman
> >>>>>> doesn't
> >>>>>> pay the employer a market rate of interest for the loan)?
>
> >>>>> No.
>
> >>>> Why not?
>
> >>> Cos a loan to an employee is a taxable benefit.
>
> >> You said yourself that this isn't always the case.
>
> > What are you referring to - the few exceptions (which I didn't mention > > how do you consider these might apply in this case?) or my reference to
> > £5k which you snipped (maybe you think salesmen's cars shouldn't cost more
> > than £5k) ?
>
> Yes the 5k.
>
> No I don't expect that, in general, a salesmen's car should cost less than
> 5K.  But ISTM that if said salesman is so strapped that he cant get a loan
> on his own, a 5K car seems about all he should be driving.
>
> tim

Wow... lots more replies than I expected... to address a couple of
points:

1. Point taken regarding coming over to London for example for bi-
monthly sales meetings with the rest of the sales team - we will have
to get rail tickets to cover this.

2. The tracker helps reduce the insurance on the goods which the
salesperson is selling. Also, if the car is stolen, it helps there.
Finally, we can use it to prove to HMRC that it is not being used on
weekends etc if it proves necessary.

3. We are expecting 40k miles per year, worst case. This would equate
to 11.5k a year if we pay 40p 1st 10kmiles, and 25p/mile thereafter!

To be honest, I wouldn't have minded allowing some private mileage
etc, but given the business conditions out there, and the punitive VAT
treatment, I'd rather pay them a bit extra. I would save about 2800 in
VAT on the car, and 520 a year roughly in VAT on fuel. From what I
understand I could only claim 1/2 the VAT on fuel only in private use,
no VAT claimback on the car, and the employee has to pay benefit in
kind.

Leasing isn't too bad an option, but at 13k I'm thinking just buy the
car? (VW passat 2.0 diesel 140 PS)

For now though, going to start badgering the local tax office to get
their confirmation in writing that if we satisfy the above points,
they won't kick up a stink!

Thanks,
Raj

>
> 1. Point taken regarding coming over to London for example for bi-
> monthly sales meetings with the rest of the sales team - we will have
> to get rail tickets to cover this.
>
Does that qualify me for perhaps a small parsnip please?  [Unwaged
wrinklies cannot afford to be proud :)) ]

A belated further thought.  Will your sales person spending nights away 
from home "on business"?  If so, you may be into what is, IIRC, somewhat 
grey territory as to just what use of the car will be business and what 
private.

Eg if staying in a hotel

o    use of the car to drive a reasonable distance to get an evening 
meal would be business use (especially if there is no restaurant in the 
hotel);
o    use of the car to go the cinema wouldn't.

Probably.  Depending on the facts.  (And on who ends up looking at it 
and what socks they are wearing that day).  You can try asking your 
local tax office about that but you may just not want to go there.

Also, while off your question, does your insurance company take the same 
view as HMRC of what is and isn't business travel?  (My suspicion is 
that the insurers may well be less tolerant of any use at the margins if 
an accident occurred during that use.  But that's possibly just me being 
a cynical old b*****d.)

Apologies if these are "teaching granny to suck" points.
-- 
R

Martin wrote:

> Would
> you lend money to a salesman who's 400+ miles away, working in isolation,
> and isn't even creditworthy....? :-)

Well, OK, you have a point, but unless there's reason to suspect
that he might abscond with the car (seems unlikely if he wants to
leave his employability undamaged), I think I would.  Any extent
to which he is unworthy of credit would not worry me because the
loan would in effect be secured against his income from a reliable
source (me), i.e. I would deduct the repayments from his salary.

Remember the alternative would have been to buy the car outright
and entrust it to him.

> Furthermore, the company has to pay 1A NICS... :-(

That's what, 12.8% of 4.75% of most of the cost of a £15k-£20k car?
That's peanuts, provided the guy's as good as his reputation.

"abd08"  wrote in message 
news:5699f078-0e02-4d9e-84f2-5068eaff9fa6@o10g2000yqa.googlegroups.com...
> Hi all,
>
> I want to employ a sales person in Scotland, and our business is based
> in London. We want to claim VAT on the purchase of the car, all fuel,
> and also not have the sales person pay benefit in kind as the car will
> be exclusively for business use. They will use the car to go and visit
> different customers, as well as try and open new accounts.
>
> To monitor this, a tracker will be fitted keeping a log of all car
> movements, as well as terms written into the contract stipulating the
> car is not for personal use. Insurance on the vehicle will be for
> business use only, although the car of course will be parked at the
> employee premises. A fuel card will be used which can only be used for
> that numberplate of vehicle.
>
> Does anyone have any experience in dealing with HMRC and satisfying
> them of this requirement?
>
> Thanks,
> Raj

and how do our top MP's get away with their BIG limos, especially Mr Brown 
who is NEVER seen in anything but one.

On Nov 4, 6:30 am, "Jef Roe"  wrote:
> "abd08"  wrote in message
>
> news:5699f078-0e02-4d9e-84f2-5068eaff9fa6@o10g2000yqa.googlegroups.com...
>
>
>
>
>
> > Hi all,
>
> > I want to employ a sales person in Scotland, and our business is based
> > in London. We want to claim VAT on the purchase of the car, all fuel,
> > and also not have the sales person pay benefit in kind as the car will
> > be exclusively for business use. They will use the car to go and visit
> > different customers, as well as try and open new accounts.
>
> > To monitor this, a tracker will be fitted keeping a log of all car
> > movements, as well as terms written into the contract stipulating the
> > car is not for personal use. Insurance on the vehicle will be for
> > business use only, although the car of course will be parked at the
> > employee premises. A fuel card will be used which can only be used for
> > that numberplate of vehicle.
>
> > Does anyone have any experience in dealing with HMRC and satisfying
> > them of this requirement?
>
> > Thanks,
> > Raj
>
> and how do our top MP's get away with their BIG limos, especially Mr Brown
> who is NEVER seen in anything but one.

Gordon Brown's car will have special security features.

"Ronald Raygun" <no.spam@localhost.localdomain> wrote in message 
news:7R3Im.1468$Ym4.797@text.news.virginmedia.com...
> Martin wrote:
>
>> Would
>> you lend money to a salesman who's 400+ miles away, working in isolation,
>> and isn't even creditworthy....? :-)
>
> Well, OK, you have a point, but unless there's reason to suspect
> that he might abscond with the car (seems unlikely if he wants to
> leave his employability undamaged), I think I would.

That's good - it means he could still get a job (with you) and maybe repair 
his credit score.  Then I'd poach him.

> Any extent
> to which he is unworthy of credit would not worry me because the
> loan would in effect be secured against his income from a reliable
> source (me), i.e. I would deduct the repayments from his salary.

Er - I wouldn't regard that as very secure.

> Remember the alternative would have been to buy the car outright
> and entrust it to him.

That's one alternative - not the only one.  Eg increasing numbers of 
employees lease / contract cars from their employers these days - using the 
allowance to meet the cost.

>> Furthermore, the company has to pay 1A NICS... :-(
>
> That's what, 12.8% of 4.75% of most of the cost of a £15k-£20k car?
> That's peanuts, provided the guy's as good as his reputation.

Well it's all peanuts at the end of the day, compared with what your 
high-flying salesman is putting on the bottom line.  (Minor note - ER's NIC 
rises to 13.3% in April).

But the company also has to  find the money to lend the employee.  As you 
remarked earlier, they'd struggle to get it for 4.75%.


-- 
Martin

"PeterSaxton"  wrote in message
news:e54612b1-bc6a-484a-8ff0-ad84dc7cb7b8@m16g2000yqc.googlegroups.com...
On Nov 4, 6:30 am, "Jef Roe"  wrote:
> "abd08"  wrote in message
>
> news:5699f078-0e02-4d9e-84f2-5068eaff9fa6@o10g2000yqa.googlegroups.com...
>
>
>
>
>
> > Hi all,
>
> > I want to employ a sales person in Scotland, and our business is based
> > in London. We want to claim VAT on the purchase of the car, all fuel,
> > and also not have the sales person pay benefit in kind as the car will
> > be exclusively for business use. They will use the car to go and visit
> > different customers, as well as try and open new accounts.
>
> > To monitor this, a tracker will be fitted keeping a log of all car
> > movements, as well as terms written into the contract stipulating the
> > car is not for personal use. Insurance on the vehicle will be for
> > business use only, although the car of course will be parked at the
> > employee premises. A fuel card will be used which can only be used for
> > that numberplate of vehicle.
>
> > Does anyone have any experience in dealing with HMRC and satisfying
> > them of this requirement?
>
> > Thanks,
> > Raj
>
> and how do our top MP's get away with their BIG limos, especially Mr Brown
> who is NEVER seen in anything but one.

Gordon Brown's car will have special security features.

---------------

It does - have you not noticed the thickness of the doors and windows? 
Armoured Daimler V8 (supercharged).  IIRC, the added strengthening started 
in Thatcher's era.

-- 
Martin

Martin wrote:

> "Ronald Raygun" <no.spam@localhost.localdomain> wrote in message
> news:7R3Im.1468$Ym4.797@text.news.virginmedia.com...
>> 
>> Any extent
>> to which he is unworthy of credit would not worry me because the
>> loan would in effect be secured against his income from a reliable
>> source (me), i.e. I would deduct the repayments from his salary.
> 
> Er - I wouldn't regard that as very secure.

It's secure enough while he carries on working for me.  Of course when
you then poach him, it's another story.  :-(

>> Remember the alternative would have been to buy the car outright
>> and entrust it to him.
> 
> That's one alternative - not the only one.  Eg increasing numbers of
> employees lease / contract cars from their employers these days - using
> the allowance to meet the cost.

I didn't know you could do that.  It looks very much like pretending it's
not a company car when in fact it is.

> Gordon Brown's car will have special security features.
>
> ---------------
>
> It does - have you not noticed the thickness of the doors and windows?
> Armoured Daimler V8 (supercharged).  IIRC, the added strengthening
> started in Thatcher's era.

Yes indeed. But that wouldn't [1] be enough by itself to get out of tax. 
For that there is the specific tax exemption introduced in FA 1996 and 
now in section 295 ITEPA [2].

[1] I don't know and can't be bothered to check but the relief for 
security benefits used explicitly to exclude cars.
[2] I'll admit I did checked that
-- 
R

"Ronald Raygun" <no.spam@localhost.localdomain> wrote in message 
news:TNbIm.1539$Ym4.614@text.news.virginmedia.com...
> Martin wrote:
>
>> "Ronald Raygun" <no.spam@localhost.localdomain> wrote in message
>> news:7R3Im.1468$Ym4.797@text.news.virginmedia.com...
>>>
>>> Any extent
>>> to which he is unworthy of credit would not worry me because the
>>> loan would in effect be secured against his income from a reliable
>>> source (me), i.e. I would deduct the repayments from his salary.
>>
>> Er - I wouldn't regard that as very secure.
>
> It's secure enough while he carries on working for me.  Of course when
> you then poach him, it's another story.  :-(
>
>>> Remember the alternative would have been to buy the car outright
>>> and entrust it to him.
>>
>> That's one alternative - not the only one.  Eg increasing numbers of
>> employees lease / contract cars from their employers these days - using
>> the allowance to meet the cost.
>
> I didn't know you could do that.  It looks very much like pretending it's
> not a company car when in fact it is.
>

Yes - AIUI it's quite common.  The employer (a) can generally negotiate 
better rates with the contract hire firm, (b) control / restrict the make / 
model as req'd, (c) provide the insurance cover, so they know it's all ok, 
(d) ensure relief car included in contract, (e) keep hold of car if employee 
leaves, (f) ensure MOT and any fines etc are dealt with by employee.

For the employee, the risk of signing up to (say) a 3-year contract is 
removed, as is liability for excess mileage.  All servicing / maintenance is 
taken care of properly (franchised dealer etc).  Fixed and known cost from 
the outset.

There is no question about it being a co.car (providing, of course, the 
employee is correctly paying the full cost).  All payments are taking 
through payroll (after tax, obviously) - and will broadly balance with car 
allowance (also taxable and NI-able).

One small downside - employee ends up paying VAT on VED and (I think) 
insurance.

A win-win.  And what I'd consider seriously if I needed a guy to sell 
widgets in Scotland.


-- 
Martin

"neverwas"  wrote in message 
news:urcIm.1552$Ym4.350@text.news.virginmedia.com...
>> Gordon Brown's car will have special security features.
>>
>> ---------------
>>
>> It does - have you not noticed the thickness of the doors and windows?
>> Armoured Daimler V8 (supercharged).  IIRC, the added strengthening
>> started in Thatcher's era.
>
> Yes indeed. But that wouldn't [1] be enough by itself to get out of tax. 
> For that there is the specific tax exemption introduced in FA 1996 and now 
> in section 295 ITEPA [2].
>
> [1] I don't know and can't be bothered to check but the relief for 
> security benefits used explicitly to exclude cars.
> [2] I'll admit I did checked that
> -- 
> R

But it's not the PM's car.  Think of it as a taxi.  Which trips are not WN&E 
business?

-- 
Martin