Two directors of haulage company Harrison Solway Logistics Ltd have won a tribunal appeal against HMRC’s claim that they had not paid the correct income tax on the use of leased company cars and the use of fuel cards.
Paul Harrison and Lee Solway appealed against HMRC’s decision that for the tax years 2010-11 to 2013-14, cars leased by the directors were company cars and company fuel cards given to the directors were taxable.
The company also appealed against HMRC’s decision that Class 1A NICs charges were due on the provision of the car as well as fuel benefits and penalties for its failure to deliver returns of benefits provided by it to the directors.
HMRC contended that cars were made available to the directors by reason of their employment and without any transfer of the property in them and they were available for private use.
However, the judge ruled that payments from the directors’ loan account should be taken into consideration. He said those debits were the amounts of the hire purchase and rental payments made by HSL to the leasing companies.
There was no benefit to them in the arrangements and so s. 114, ITEPA 2003 did not apply to the provision of cars to the directors.
As there was nothing to be charged to income tax in relation to cars and fuel, the assessments and interest fell away. However, the FTT held that penalties on the company for failing to file a P11D(b) in time to HMRC from benefits accruing to the directors from BUPA subscriptions etc, under reg. 81(2) SSCR did apply.
With regard to NICs, the FTT found that Class 1A NICs should have been charged in respect of benefits other than car and fuel benefits.
