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Pool Cars - Don't get into deep water -
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Pool Cars - Don't get into deep water
Just recently we have picked up on quite a bit of confusion and uncertainty concerning Pool Cars and Vans, and so the following explanation may help....
Some employers, find it convenient to have one or more cars or vans that are readily available for business use by a number of employees. The cars or vans are not allocated to any one employee and are only available for genuine business use. Such cars and cans are usually known as pooled cars and vans.
From a tax perspective pooled cars or vans are not considered a benefit, providing they meet ALL of the following criteria;
it was made available to, and actually used by, more than one employee,it was made available, in the case of each of those employees, to carry out their jobit was not ordinarily used by one of those employees to the exclusion of the others,any private use of it made by the employee was merely incidental to the employee's other use of it in that year (further explanation below), and it was not normally kept overnight on or in the vicinity of any residential premises where any of the employees was residing, except while being kept overnight on presmies occupied by the person making it available to them (further explanation below)For the purpose of these five conditions all employees should be considered, including those in excluded employments, who would not be chargeable to tax even if the car or van were available for their private use.
It is important that each of these conditions is considered in turn. It is not enough that a car satisfies four of them and narrowly fails the fifth!
'Merely incidental to its business use' - what does that mean?
The meaning of the phrase 'merely incidental to' may give rise to difficulty.
We regard it as implying a qualitative rather than quantative test. It does not refer to the extent of private mileage but rather to the private element viewed in the context of a journey as a whole. Support for this view can be found in Robson v Dixon (48TC527) where the judge said in another context that;
"the words "merely incidental to" are....apt to denote an activity....which does not serve any independent purpose but is carried out in order further some other purpose".
Thus the use of a car or van for what is primarily a business journey, but which includes some limited private use, would satisfy the words merely incidental to.
An example might be an employee who is required to make a long business journey. So that the employee can make an early morning start he or she is allowed to take a pooled car home the previous evening. The office to home journey counts as private use, but in these circumstances it is plainly subordinate to the business journey the next day. It is undertaken to facilitate the business trip. It is thus merely incidental to the business use.
Even so, a reservation is necessary in this type of case. If it happened too often the car would fail the third condition becuase it would be kept fairly often in the vicinity of the employee's home. In thses cicumstances the car would not rank as a pooled car.
'Not normally kept overnight' - what does that mean?
You can accept that a car is not normally kept overnight at employee's homes if the total number of nights on which it is taken home by employees, for whatever reason, is less than 60% of the total number of nights in the period under review.
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