company car fuel tax question

rowan_gibson

Hi All

I've had quite a shocking new tax code today K437 :eek:

most of this is due to me owing tax to the HMRC, i need to find out what this is about becuase to my knowledge i shouldn't owe anything.

I owe £701 in tax for my company fuel card that allows me free fuel for personal use, while i have no problem in paying this i do have one question. I only got the fuel card part way through the year (September 2010) does this mean i should only be liable for the tax for that portion of the year or am i liable for the whole benefit as if it was a full year?

Thanks

Ro

Bean_Counter

rowan_gibson wrote: »

I only got the fuel card part way through the year (September 2010) does this mean i should only be liable for the tax for that portion of the year or am i liable for the whole benefit as if it was a full year?

You are only liable for tax on the portion of the year that you had the benefit.

It is certainly worth checking that the tax code is indeed correct. Your employer should have completed a P46(CAR) form to HMRC last year to inform them that you had a company car and that your tax code should have been altered accordingly last year. Ask your employer to check that the tax code is correct (that's what I do for my employees who have queries on tax code changes.)

jimmo

Bean_Counter wrote: »

You are only liable for tax on the portion of the year that you had the benefit.

Whilst that seems entirely logical, as far as I can see, it is not matched by the rules.
The fuel charge is an annual charge (booklet 480 chapter 3 para 13.6).
It can be reduced:
1) if the car is not available for the entire year (booklet 480 chapter 3 para 13.8)
2) if private fuel is withdrawn ( booklet 480 chapter 3 para 13.9)
http://www.hmrc.gov.uk/guidance/480_chapter13.pdf

I cannot find anything to say the charge is reduced if the car is provided for the whole year and private fuel only starts part way through the year.

rowan_gibson

jimmo wrote: »

Whilst that seems entirely logical, as far as I can see, it is not matched by the rules.
The fuel charge is an annual charge (booklet 480 chapter 3 para 13.6).
It can be reduced:
1) if the car is not available for the entire year (booklet 480 chapter 3 para 13.8)
2) if private fuel is withdrawn ( booklet 480 chapter 3 para 13.9)
http://www.hmrc.gov.uk/guidance/480_chapter13.pdf

I cannot find anything to say the charge is reduced if the car is provided for the whole year and private fuel only starts part way through the year.

This is my worry, it seems if you loose the fuel midway through the year you don't pay for the whole benefit, but it seems that i may have to....

jimmo

rowan_gibson wrote: »

This is my worry, it seems if you loose the fuel midway through the year you don't pay for the whole benefit, but it seems that i may have to....

Agreed but Bean Counter seems to have much more day to day experience than me on cars and fuel and may know better.

ceeforcat

'However, receiving

free fuel again later in the same tax year will prevent any apportionment under this paragraph'

And this bit does not seem to help either in this regard.

Bean_Counter

Having read this paragraph from the link to booklet 480 again:

"Reduction because private fuel is withdrawn
Sections 152 and 13.9 The fuel benefit charge is reduced if free fuel ceases to be provided to an employee during
163 the tax year. This requires a decision to introduce conditions (a) or (b) at paragraph 13.5 above
on a date in the year.
Any days after the provision of free fuel ceased on which the company vehicle was available are
added to any days for which it was unavailable as described in paragraph 13.8. However, receiving
free fuel again later in the same tax year will prevent any apportionment under this paragraph."

I would argue that it does not directly address the OP's situation. It covers of course if fuel is provided and then withdrawn then the benefit can be apportioned over the year. The last part does not apply as there was not the situation where there was private provided, withdrawn and then provided again.

Although we all know that logic has no place in taxation law (sorry Jimmo), I would be prepared to argue that is reasonable to time apportion the benefit as the OP's circumstances are the exact reverse of those detailed in paragraph 13.9 of the link and the principle is maintained.

Does the OP know what his employers are planning to put on his P11D in due course?

rowan_gibson

No Idea yet until i recieve my p11d, i am hoping they will note that i recived the free fuel mid way through the year.

will be back on here when i recieve my p60 and p11d to try and make sense of it all.

taxing

The P11d does allow for a fuel start date that is different from the car start date.

The bit quoted from booklet 480 is where HMRC are just assuming car & fuel are both given together and at the outset - but it is recognised that not all employers will give fuel benefit as well as the car.

You shouldn't have a problem unless employer has forgotten that you didn't get the use of a fuel card straight away. If that happens, draw it to the employer's attention as P11Ds can be amended - but employer needs to submit the amendment.

Of course, your 2011/12 code will have a full years BIK on the fuel benefit for this new tax year so, if it has stopped again, you will need to phone the tax office & tell them.

Regards.

ceeforcat

http://www.hmrc.gov.uk/ebu/p11d-2010.pdf

Whereabouts taxing - would be very interested if you are correct.

jimmo

Bean_Counter wrote: »

Although we all know that logic has no place in taxation law (sorry Jimmo).
Does the OP know what his employers are planning to put on his P11D in due course?

No need to apologise, even taxmen recognise that Tax and logic are strange bedfellows.
Subject to anything taxing has to say in reply to ceeforcat's post, this ex-taxman's Revenue logic is that if rowan_gibson's employer correctly includes the correct fuel benefit on the P11D he will really struggle to get that reduced.by HMRC.
If the employer incorrectly includes an apportioned fuel benefit on the P11D then, in the first instance rowan_gibson will get a satisfactory result.
However if the employer is subject to a PAYE audit what will happen then?
In my days on PAYE audit, there was no way that the employer would escape sanction regardless of logic.
Revenue logic is "Rules is rules".
Hopefully taxing can enlighten us.