Private mileage for vans

[steve23]

Hi all,

(In the name of 'privacy' please excuse if i keep this 'fictional').....

Company A has a fleet of vans. The vans remain with the relevant employees who drive them to and from their homes. The company is happy to accept private use of the vans by its drivers. The company has a policy that provided such use does not exceed (lets say...) 100 miles a year then its is counted as insignificant and they will not refer it to the tax office (so employee does not get taxed for having a van). So far so good and i think in line (for the most part) with HMRC own advice on private use of vans etc. But.....

The company requires the employees to report whatever private miles they do and they get billed accordingly for the fuel.

Now, I cant help but think if you are billing for the fuel, then the company is, in effect, saying this is not insignificant, so if i was HMRC, id tend to say the same and would expect it to be recorded for tax.

Am I wrong ?

To sum up, my thinking is that if HMRC say an employee going slightly out of their way to get a newspaper is counted as insignificant, then the company cant charge for that miles, otherwise they are making it 'significant'.

I should also add that i dont have a preference (or anything to gain) from either side of the argument, im just interested in others thoughts out of professional curiosity

Thanks

 

[WaveJumper]

From the HMRC website so not sure if this helps:
Work out the value
Vans used for private journeys
You’ll need to report a standard value of £3,500 to HM Revenue and Customs (HMRC). This can be reduced if:

• your employee cannot use the van for 30 days in a row
• your employee pays you to privately use the van
• other employees use the van - divide £3,500 by the number of employees

Van fuel for private journeys
You’ll need to report a standard value of £669 to HMRC. This can be reduced if:

• the employee cannot use the van for 30 days in a row
• your employee pays you back for all their private fuel
• you stopped providing fuel during the tax year
• https://www.gov.uk/expenses-and-benefits-company-vans/work-out-the-value

 

[UK Contractor Accountant]

EIM22745 - Van benefit from 2005/06: definitions - insignificant private use

Section 114(3A) ITEPA 2003
The guidance on this page only applies to vans from 2005/06; it has no relevance whatsoever to car benefit (EIM23000 onwards) or to van benefit for years up to and including 2004/05 (EIM22050 onwards).

Insignificant private use
Even though a van is available for private use, it remains outside the van benefit charge for a tax year if private use of the van during the tax year by the employee or member of his family or household (EIM20504) is insignificant (including nil for this purpose).

If a van is exempt from the van benefit charge for this reason, Section 202 ITEPA 2003 also exempts it from the residual benefits legislation in Part 3 Chapter 10.

Meaning of insignificant private use
The word ‘insignificant’ is not defined, so it takes its normal English meaning. For example, the New Oxford English Dictionary defines it as, “too small or unimportant to be worth consideration”.

Private use is to be considered insignificant if it is:

• insignificant in quantity in the tax year as a whole (i.e. a few days at most)
• insignificant in quality (e.g. a week’s exclusive private use is clearly not insignificant)
• intermittent and irregular
• very much the exception in terms of the pattern of use of that van by that employee (or their family or household) in that tax year
• insignificant in absolute terms, not merely as a proportion of other use.

If the van in which the private use takes place is shared, use is likely to be insignificant if it is not just and reasonable (EIM22830) to reduce the benefit of the other sharer on account of it (precisely because it is “too small or unimportant to be worth consideration”).

Insignificant private use elsewhere in the vans legislation
The term insignificant is also used in relation to the restricted private use condition (EIM22795). It carries the same meaning there.

Examples
There are some examples at EIM22880. They are intended to be sufficient to illustrate the principles involved and HMRC staff should not comment on other possibilities.

 

[MyAccountantOnline]

...

Now, I cant help but think if you are billing for the fuel, then the company is, in effect, saying this is not insignificant, so if i was HMRC, id tend to say the same and would expect it to be recorded for tax.

...

My thoughts too.