One of the many perks a business can provide is access to a company car. However, whether or not HMRC recognises the car as a commercial/business vehicle is another question.

Recently, a car and car fuel benefit charge of over £40k was demanded (before interest and penalties) when HMRC undertook an employer compliance review of a business.

The charge was based on a company car being “made available for the private use” of the individual between October 2013 and April 2016. The car under query was a 4×4 vehicle which was used on industrial sites.

Reasons the company believed it was a commercial / business only vehicle:

  • The company vehicle was primarily a site vehicle
  • The individual and their spouse always had their own private cars
  • The individual used their own vehicle outside of work
  • The business was run from premises very close to the individual’s home
  • The business premises are very remote therefore the car was normally kept at the individual’s home overnight for security purposes
  • The business involved the individual undertaking a lot of business travel between different sites
  • The individual’s own car wasn’t equipped for being driven on or around the sites
  • A company vehicle was acquired as it was suitable for travel around the sites and primarily used for business
  • The company provided all fuel for the car
  • The only personal use of the vehicle was the journey between the individual’s home and the main site, which was less than 50 miles per week
  • The individual took the vehicle home for security and was required to be “on call” 24 hours a day

HMRC’s Review

As the vehicle was “available” for the private use of the individual, HMRC would not accept that this should not be treated as a company car for benefit in kind purposes and also applied the accompanying fuel benefit charge.

The car benefit for the tax years 2013/14 to 2015/16 was calculated at £58k and the fuel benefit was £18k. The employer had to therefore settle underpaid income tax (which would ordinarily be due from the individual) of £30k and underpaid Class 1A NIC of over £10k on these benefits in kind.

The individual made a repayment of the private element of fuel over the period under review by HMRC, at a rate which exceeded HMRC’s relevant advisory fuel rates. This was done in the hope that HMRC would accept that no fuel benefit charge had to be paid for the company vehicle. HMRC would not accept these proposals on the basis that the legislation and HMRC guidance on this matter does not provide for any concession to be made.

As the fuel relating to individual’s private use was not made good in the tax year in question, this was included in the calculation of car fuel benefit.

Double-cab pick-ups

Whilst not relevant in the case of the business above, there is an additional complication to be aware of where the commercial vehicle made available to the employee for private use is a double-cab pick-up truck.

In Coca Cola v HMRC, the first-tier tax tribunal ruled that some double-cab pick-up trucks fall within the company car tax rules (VW Kombi) whereas others fall within the company van tax rules (Vauxhall Vivaro). This is contrary to HMRC’s published guidance on the matter, therefore caution should be exercised before following HMRC’s guidance.

The company car tax charges are usually significantly higher than the company van tax charges so it is important that employers consider the potential implications when vehicles are provided to employees.

Please note that other double-cab pick-ups are yet to be tested in court and the discussion and application of the principles was extremely complex and thorough in the case of the specific vehicles being considered. However, there remains a large grey area in terms of the tax treatment for double-cab pick-ups.


In summary, if a vehicle is “available” for an employee’s private use then a company car/van benefit charge (and potential fuel charge) could arise. Furthermore, if fuel cards are provided to company vehicle users there may also be a Class 1 NIC charge due via the payroll.