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HMRC INVESTIGATION

Company Vans

With effect from 6th April 2007 company vans, where there is a personal benefit, will give rise to tax on a benefit of £3,000. This applies regardless of the age of the van. This is proportionately reduced if the van is not available for the whole tax year. In addition there is a new taxable benefit covering private fuel provided for the van with effect from 6th April 2007 which will give rise to a taxable benefit of £500. This benefit applies if so much as one pound of private fuel is provided during the tax year.


Private Use?

In order to demonstrate to the Inland Revenue that there is no private use the tax authorities may

expect you to:  a) Keep records of mileage; b) To sign an agreement about restricted use of the van; c) To include restricted use of the van in the contract of employment.


The Inland Revenue expect virtually no private use of the van in order to qualify. They will accept

very insignificant use of the van such as stopping on the way home to pick up a newspaper

occasionally, but use of the van for a weeks' holiday or regularly using it to take private rubbish to

the local dump would be classed as private mileage. Obviously, this is a very grey area so you

need to be exceptionally careful.


Private Fuel

Obviously private fuel cannot apply if there is no private use of the van. However, if there is

accepted private use of the van then it is important to ensure that only business fuel is paid for by

the employer. In order to demonstrate this the standard recommended advice is that the individual

retains with his tax records for the year a proportion of his unclaimed fuel bills that relate to private use.

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