Changing lanes to get the answer they want

The Court of Appeal decided that cars leased by an employer to its employees on arm’s length terms did not constitute a taxable benefit in kind.

HMRC had argued that the employees should be charged to income tax on the cash equivalent of the cars which to our mind seemed unfair, although we were aware of HMRCs view in this area.

Being bad losers the Finance Bill 2016 includes a clause ‘in determining [the benefit of] a car or van made available to an individual it is immaterial whether or not the terms on which the car or van is made available constitute a fair bargain.’ In other words if there is a specific statutory provision for calculating the tax charge on a benefit-in-kind, this must be used.