Duty to give tax advice

[Ivanzyt]

Bit of a weird one, I think I know the answer but its always good to get another opinion

We have a company car scheme and have done for 10 years or so.
We lease cars for our sales guys
Never had an issue with it before; sometimes they grumble about the tax, but it works well.
A year ago we let several of the reps choose their own cars within a budget.
One rep did his research and opted for a plug-in hybrid as it had a 7% BIK rate and so would reduce his personal tax
Another rep chose a hybrid but didn't do his research well enough and it had a 31% BIK rate

Now, a year later, he is complaining that he has not been treated fairly and the company should have advised him on what car to get. His colleague, who got the lower BIK rate car advised him what car to get but he ignored it. We, the company, do not give tax advice cos we aren't tax advisers! He has worked himself into such a state over this that he is threatening to resign because we didn't look after him. In his opinion, it is the company's responsibility to advise him on the most tax-efficient car.

Is there any obligation for us to give such advice? Or any legal duty of care to protect him from making poor decisions about his choice of car? I don't think there is but, but hey, I'm not an expert, and to be frank have not really given much thought to BIK rates for company cars until this week. For 10 years or so we just provide our reps with cars, they pay the benefit-in-kind tax, and that's that.

 

[Frank the Insurance guy]

I think it is a bit harsh of the employee to hold you responsible, but not sure on his legal position!

I would suggest checking your business insurance - most provide free telephone legal advice. Give them a call and talk them through the situation and they will confirm your exact legal position here.

I would be surprised if you can be held responsible, but suspect it may all depend on the details of how you presented it to the employees at the time - did you at any time refer to BIK, potential tac savings etc?

Also - did he have a company car previously. If so what was the BIK compared to the new car he chose - was any warning given?

Unfortunately in todays world of Employers needing to Nanny their employees, it may be your problem.

As an aside, from my experience of working with accountants, my understand is that a person (or company) cannot hold you responsible for the amount they have to pay in tax - however they potential can pursue you for their financial loss (eg. additional costs they incur due to not having the funds available as expected), if they can provide that you have been negligent in not provided the advice you legally should have done.

 

[Ivanzyt]

I think it is a bit harsh of the employee to hold you responsible, but not sure on his legal position!

I would suggest checking your business insurance - most provide free telephone legal advice. Give them a call and talk them through the situation and they will confirm your exact legal position here.

I would be surprised if you can be held responsible, but suspect it may all depend on the details of how you presented it to the employees at the time - did you at any time refer to BIK, potential tac savings etc?

Also - did he have a company car previously. If so what was the BIK compared to the new car he chose - was any warning given?

Unfortunately in todays world of Employers needing to Nanny their employees, it may be your problem.

As an aside, from my experience of working with accountants, my understand is that a person (or company) cannot hold you responsible for the amount they have to pay in tax - however they potential can pursue you for their financial loss (eg. additional costs they incur due to not having the funds available as expected), if they can provide that you have been negligent in not provided the advice you legally should have done.

Cheers
The BIK on his old car was the same as the new one that he chose.
We didn't really talk much about BIK percentages but I know one of his colleagues did. This colleague did a lot of research and came to the company with a specific car that he wanted so he could save tax. We agreed to that car and now he is pay far less tax. I now that this information was communicated between them but for some reason he chose a car that had a similar BIK rate to his old car. I suspect he saw that the car he wanted was a hybrid but didnt check the BIK rate (not all hybrids get the lower BIK rates apparently). So my take is that he made a mistake and is now trying to blame the company for not advising him properly. But we have never advised anyone on any of this, we just get our people the car they want as long as the lease fits within an agreed monthly cost.

 

[Lisa Thomas]

How can he expect his employer to give him tax advice? Are you qualified tax accountants...?

When you send him the options about picking a car, is there anything in writing to the employees about seeking their own advice before making an informed decision etc?

Maybe @Newchodge can give an opinion...

 

[DontAsk]

Is there any obligation for us to give such advice?

Of course not.

Or any legal duty of care to protect him from making poor decisions about his choice of car?

No.

When I had a company car I got stuffed because the offer of free aircon as a dealer fit option was taxable, as though I had paid full price for it. I didn't do my research

 

[Ivanzyt]

How can he expect his employer to give him tax advice? Are you qualified tax accountants...?

That was more or less my exact "instinctive" reaction! No we most certainly are not tax accountants

 

[Daybooks]

Do not forget to check whether advice on crossing the road is needed.
Might want to check your recruitment scrutiny is all it should be.

 

[Frank the Insurance guy]

Cheers
The BIK on his old car was the same as the new one that he chose.
We didn't really talk much about BIK percentages but I know one of his colleagues did. This colleague did a lot of research and came to the company with a specific car that he wanted so he could save tax. We agreed to that car and now he is pay far less tax. I now that this information was communicated between them but for some reason he chose a car that had a similar BIK rate to his old car. I suspect he saw that the car he wanted was a hybrid but didnt check the BIK rate (not all hybrids get the lower BIK rates apparently). So my take is that he made a mistake and is now trying to blame the company for not advising him properly. But we have never advised anyone on any of this, we just get our people the car they want as long as the lease fits within an agreed monthly cost.

Thanks for the additional info. So he's no worse off than we was before. Looks like he assumed he would be better off with a hybrid. Can't see at all how you are responsible!

Looks like just a matter of how you handle an unhappy employee - good luck!

 

[JEREMY HAWKE]

This bloke is a proper turnip
Tell him to sort himself out and back it up in writing

 

[UK Contractor Accountant]

So my take is that he made a mistake and is now trying to blame the company for not advising him properly. But we have never advised anyone on any of this, we just get our people the car they want as long as the lease fits within an agreed monthly cost.

When my wife was a Medical Company sales rep she was given a list of cars she could choose from - no advice was given on the taxable benefit of each car so she had to do her own research which is what your employees should be doing.

I recall she was directed Comcar to do her own research - link below.

https://comcar.co.uk/

 

[Ivanzyt]

Thanks for the additional info. So he's no worse off than we was before. Looks like he assumed he would be better off with a hybrid. Can't see at all how you are responsible!

Looks like just a matter of how you handle an unhappy employee - good luck!

Yep - looks that way to me................................

 

[Ivanzyt]

When my wife was a Medical Company sales rep she was given a list of cars she could choose from - no advice was given on the taxable benefit of each car so she had to do her own research which is what your employees should be doing.

I recall she was directed Comcar to do her own research - link below.

https://comcar.co.uk/

Do you know what the really maddening thing is? One of his colleagues did exactly this, and even talked to him about it and sent him to comcar.co.uk. We sorted out a nice 7% BIK rate hybrid car for his coleague and would have done the same for him if he selected the same car. But he didnt.

 

[Frank the Insurance guy]

Do you know what the really maddening thing is? One of his colleagues did exactly this, and even talked to him about it and sent him to comcar.co.uk. We sorted out a nice 7% BIK rate hybrid car for his coleague and would have done the same for him if he selected the same car. But he didnt.

As the saying goes -

"You can lead a horse to water, but you can't make it drink"​

 

[MikeJ]

Anyone know the BIK on a horse?

 

[Deleted member 370123]

Bit of a weird one, I think I know the answer but its always good to get another opinion

We have a company car scheme and have done for 10 years or so.
We lease cars for our sales guys
Never had an issue with it before; sometimes they grumble about the tax, but it works well.
A year ago we let several of the reps choose their own cars within a budget.
One rep did his research and opted for a plug-in hybrid as it had a 7% BIK rate and so would reduce his personal tax
Another rep chose a hybrid but didn't do his research well enough and it had a 31% BIK rate

Now, a year later, he is complaining that he has not been treated fairly and the company should have advised him on what car to get. His colleague, who got the lower BIK rate car advised him what car to get but he ignored it. We, the company, do not give tax advice cos we aren't tax advisers! He has worked himself into such a state over this that he is threatening to resign because we didn't look after him. In his opinion, it is the company's responsibility to advise him on the most tax-efficient car.

Is there any obligation for us to give such advice? Or any legal duty of care to protect him from making poor decisions about his choice of car? I don't think there is but, but hey, I'm not an expert, and to be frank have not really given much thought to BIK rates for company cars until this week. For 10 years or so we just provide our reps with cars, they pay the benefit-in-kind tax, and that's that.

This is legal information, not legal advice: From the facts provided, there is unlikely to be any legal obligation on the employer to provide personal tax advice regarding BIK consequences. The employee was given a choice, had access to the relevant information, and made his own decision. As such, in the absence of a specific representation or undertaking, no obvious duty of care arises.

 

[MikeJ]

Oh look, another AI generated reply from a new user which doesn't add anything to the conversation.

 

[UK Contractor Accountant]

Anyone know the BIK on a horse?

need to know the horse power and emissions figures before I can work it out

 

[Frank the Insurance guy]

need to know the horse power and emissions figures before I can work it out

Emissions will be high! Have you seen what a Horse produces from its exhaust!

 

[DontAsk]

Emissions will be high! Have you seen what a Horse produces from its exhaust!

That's a BIK, and will need to go on the Poo11D, for any keen gardeners.

 

[nelioneil]

Anyone know the BIK on a horse?

It’s neighligible