Company van perk - problems

[clive123]

Hi people. I hope I've posted in the right section here!

 

 

I joined a company around 10months ago and it was agreed that I had use of a fully expensed van with both personal and business petrol included as part of my benefit package. It was a perk that I had at my previous role and just something that I suggested here as my other vehicle isn't viable to commute with due to both sound and cost.

 

My company have recently found small print recently that states that as the van isn't a pool van (it comes home with me each night) that it shouldn't be done this way and that I will have to either declare this or continue as is, but that it's MY responsibility if I were to get caught even though it was something that was both a verbal and written agreement via email by the company director.

 

I suggested that my salary be increased to roughly the same amount that it costs me each month to not only keep legal, but to save on hassle signing off forms and keeping receipts each month. He clearly doesn't want to do this and completely avoided the question and put it back in my court in that it's my choice what I want to do.

 

Surely this is something that they should have investigated as a company before agreeing and should honour this agreement by either covering the tax themselves or agreeing to my salary increase as above to meet their agreement?

 

Any advice much appreciated.

 

 

 

Kind regards,

 

Clive

[honeybee13]

Hi and welcome to CAG. Are you talking about being taxed on the van [and personal fuel, from memory] as benefits in kind?

 

Do you go to the same place of work every day?

 

I'm intrigued that you had the same agreement before. Was it declared to the Revenue and did you receive P11D forms, for instance?

 

HB

[clive123]

Thanks for the welcome and prompt reply!

 

I do indeed travel to the same office each morning

 

I don't get taxed on the van, they cover all the insurance, tax, servicing etc. and at the moment I simply fill the van and hand in my receipt with a claims form to get the full amount back. I wasn't aware of any 'P11D' forms or any other kind of forms to fill out. I guess this isn't my area and it's impossible to know all these facts and grey areas.

 

I would have thought that my employers would be the ones that should be aware of the rules, it shouldn't be up to staff to investigate this I would imagine..? By all means, I'm not trying to throw any blame around and certainly don't want to avoid any taxes, i'm an extremely honest person and always pay my way, but it was something that my previous company offered me and something that was agreed again where I currently am.

 

I guess what I want to know before confronting them about this issue is, am I right to request a pay rise to cover the costs of what was initially agreed, or do they have to pay the tax on this benefit to keep within regulations? I feel like they are trying to make me decide between either continuing as is, with all responsibility on my shoulders, or declare the benefit and 'take it on the chin' so to speak.

 

I feel very confused/upset right now at the attitude of my director.

[honeybee13]

Hello again. You have a few issues here and I know more about the tax part, probably. Other caggers may ask you more about what you agreed when you took on the job, but obviously I don't know how they will approach this.

 

I'll find what there is on the HMRC website about benefits in kind and company vehicles. I do know that someone with a company car cannot claim expenses for travelling to work, only for working at a different site. I can't remember how this applies to company-funded fuel, but I'm guessing that it would come under private fuel. Unless someone else knows different?

 

A P11D isn't something you fill in, you should have received one at the end of each tax year [5th April] to show what benefits in kind you had during that year. Do you remember having one of these?

 

HB

[honeybee13]

Me again. This is what the directgov website says about company vans.

 

HB

 

Van benefit

You have to pay tax on the value to you of using your employer's van privately. A standard charge - currently £3,000 - normally applies.

 

Fuel benefit

You'll see this code if you get free fuel that's available for you to use for your private motoring in a company car or van.

Fuel for cars: for 2010-11 the 'fuel charge multiplier' that HMRC uses to work out the value of your fuel benefit is £18,000.

Fuel for vans: there is a flat rate charge of £550 for the 2010-11 tax year.

 

You can use HMRC's online calculator to check the value of your car and fuel benefit.

Calculate your car and fuel benefit

[clive123]

Me again. This is what the directgov website says about company vans.

 

HB

 

Van benefit

You have to pay tax on the value to you of using your employer's van privately. A standard charge - currently £3,000 - normally applies.

 

Fuel benefit

You'll see this code if you get free fuel that's available for you to use for your private motoring in a company car or van.

Fuel for cars: for 2010-11 the 'fuel charge multiplier' that HMRC uses to work out the value of your fuel benefit is £18,000.

Fuel for vans: there is a flat rate charge of £550 for the 2010-11 tax year.

 

You can use HMRC's online calculator to check the value of your car and fuel benefit.

Calculate your car and fuel benefit

 

 

Now i'm even more confused than I was when I came here! lol. Why do they have to make it so complicated and grey?

 

I was thinking, if personal fuel needs to be taxed, I worked out that at 22% (I think this is the amount of tax charged on a benefit in kind..?) it would work out to be around £40 per month. If they were simply to increase my salary by this amount of each month, it would allow the tax to be covered and this way my employer would be meeting our agreement still. Does this sound like a good option?

[honeybee13]

Hello again. I thought I'd posted a reply but it doesn't seem to be here.

 

When you worked out the tax payable on benefits in kind, did you use the link in my post? And did you take account of the £3000 mentioned on directgov?

 

The agreement you have, is it in writing?

 

I'm still confused about whether your last employer was doing things right or not. I can't get my head around whether you paid less tax than you should have before and if it's reasonable to ask your new employer to make up the shortfall you now have. But maybe I've missed something.....

 

HB

[clive123]

Hello again. I thought I'd posted a reply but it doesn't seem to be here.

 

When you worked out the tax payable on benefits in kind, did you use the link in my post? And did you take account of the £3000 mentioned on directgov?

 

The agreement you have, is it in writing?

 

I'm still confused about whether your last employer was doing things right or not. I can't get my head around whether you paid less tax than you should have before and if it's reasonable to ask your new employer to make up the shortfall you now have. But maybe I've missed something.....

 

HB

 

 

I'm really not sure to be honest, I wasn't involved with any of it. I was just told I had full access to the van and all expenses paid by claiming back the diesel. I never really questioned it as I belive the employer takes care of that side of things?

 

I think the best way to resolve this is for them to pay the tax on the benefit in kind of fuel each month. It would work out around £40-50 per month, assuming that fuel claimed back is done at 22% also?

[honeybee13]

How large is this company that you expect to know everything please? I'm not sure HMRC would agree that all the onus is on the employer.

 

I know it looks complicated and that I have dealt with tax in the past so don't find it too hard, but I think what I posted from HMRC/dirctgov is pretty clear. Have you used the online calculator they offer or are you plucking figures from the air here?

 

The company can't pay the tax for you, to my knowledge as the van and fuel are taxable on you. They could increase your salary to cover that if they wanted, but I wouldn't want to do the maths.

 

As I said before, I still don't know if it's the employer's moral responsibility to make up the shortfall of extra tax [and you may pay extra NI as well]. Are your earnings in line with similar jobs in your area where the guys are being taxed on the value of the van and fuel, would you say?

 

I hope someone else will comment soon, but it could be that you've joined a small company who did the same as your last company because they assumed that company knew what it was doing. From what you've said so far, I don't know if the last company did. You're saying that you never received a P11D from them? This is usually, but not always, sent with your P60. I usually got 2 because the first one was wrong most years. There used to be a level of earnings where benefits in kind were taxed which I can't find in writing, but it always used to be £8,500 and I imagine you're earning more than that.

 

I hope I'm not going round in circles here. I think I'm trying to say two wrongs don't make a right and you need to think this through and keep asking questions until you think you're asking for something that's fair. If you've been lucky to have extra perks when people in similar jobs were paying the taxable benefit, is it right to expect the new company to pay?

 

I'm not disagreeing with you to be difficult, would really like to help. But at the moment, it doesn't feel right yet. Please tell us more if you can.

 

HB

[fluffy_bunny]

I was in this situation and HMRC came after me - took me 2 years on a negative tax code to pay the tax I had 'missed' during the period of having the vehicle.

 

HMRC's opinions was that the onus is on the employee to declare they have this benefit in kind, not on the employer as the employer is not responsible for paying the tax for this.

 

You seem to be lucky in 'getting away with it' with your previous employer - I doubt very much it's going to work for this employer as they seem to have picked up on the correct terms.

 

This is a benefit to you not to your company therefore YOU must bear the costs of any associated tax.

Edited August 26, 2010 by fluffy_bunny
more info

[honeybee13]

Thank you fluffy bunny. I'm sorry I was right, but I agree with your analysis.

 

How are you getting on, Clive123?

 

HB

[R&J]

Hmmm...

 

So you can declare it and get taxed, but if you forgot to declare it and HMRC eventuallly found out, all they would ask you to do is pay the tax you originally owed.

 

;-)

[patdavies]

Hmmm...

 

So you can declare it and get taxed, but if you forgot to declare it and HMRC eventuallly found out, all they would ask you to do is pay the tax you originally owed.

 

;-)

 

Plus a penalty if they are so minded....

[Sidewinder]

The key to exactly what your liability is to HMRC in this situation is what precisely you mean by 'personal use'. Unusually for company vehicles, in a van, HMRC will allow you to have the use of a company van for commuting and 'insignificant' private use with no tax liability. Therefore, providing that you use your own vehicle to do the shopping, and only use the van for commuting, duties whilst at work and perhaps the occasional trip to pick up a new wardrobe, then you have no problems. The employer is correct in stating that it is entirely your responsibility to pay any backdated tax and associated penalties were you to be caught making significant private use OR to declare such use to HMRC up front and pay for the benefit in kind through taxation.