Courts and Tribunals: September 2018

Class 1A NIC: repaid private fuel constituted a benefit for company fuel card holders

Extended periods of time allowed for a company’s fuel card holders to provide details to the company of their private mileage expenses and repay the fuel provided constituted a benefit to the holders both in the ordinary sense of the word and a benefit in kind for the purposes of ITEPA 2003, s 62. Class 1A National Insurance contributions (NICs) liabilities therefore arose for the relevant tax years, except in respect of one time-barred tax year.

Two main issues arose to be decided by the First-tier Tribunal (FTT): (1) Whether the appellant’s employees benefitted from arrangements to supply them fuel for private and personal use in their company cars; and (2) Whether, as the appellant argued, HMRC was unable to recover Class 1A NICs said to be due for the tax year 2008/09 because the six-year limitation period expired between 19 July 2009 (the time after the end of the tax year in which the NICs would be due) and 20 May 2016 (the date of decision requiring payment).

The first issue concerned 20 employees with company cars who were provided with company fuel cards to buy fuel for both business and private purposes. Company practice was that fuel card holders would email at the end of the tax year providing business and private mileage records for that year. They were told orally by the company accountant to provide the details before or shortly after the end of the year so that the company could raise an invoice for private fuel for payment by the employee on return.

Mileage records provided by the appellant demonstrated that claims submitted by employees covered the full year. Many reimbursements were not made until well after the tax year ended, and therefore failed to meet the requirement of ITEPA 2003, s 151, Condition A. The FTT stated that the appellant did not have robust measures in place and had failed to monitor the fuel benefit provided to fuel card holders in compliance with legislation over a number of years.

HMRC asserted that ‘benefits’ arose from private fuel provided to the fuel card holders and this was chargeable to those employees. The appellant maintained that the fuel card holders did not receive ‘something for nothing’ and reimbursed the full costs of private fuel used. Relying on the Court of Appeal decision in HMRC v Apollo Fuels Ltd [2016] EWCA Civ 157, the appellant reasoned there was therefore no ‘benefit’ or bounty to engage the car fuel benefit in kind charges of ITEPA 2003, s 149.

The FTT distinguished the facts of the present case from those in Apollo Fuels. A member of the public would not have been able to defer payment for at least 12 months, or sometimes up to two years, as the appellant’s fuel card holders had done without attracting a penalty or interest for late payment. There were no contractual terms or deadlines governing when payments were required to be made by the relevant employees. In the FTT’s view the employees received a ‘benefit’ in the ordinary sense of the word and a benefit in kind for the purposes of ITEPA 2003, s 62.

On the second issue, the FTT ruled that HMRC’s decision in relation to the tax year 2008/09 was made outside the limitation period and was therefore time barred. A payment made by the appellant on 27 May 2015 did not evidence a contract or an estoppel by convention for the purposes explained in HMRC v Benchdollar Ltd and Ors [2009] EWHC 1310 (Ch) such that the limitation period did not apply.

The tribunal confirmed HMRC’s decisions for the years 2009/10 and 2010/11 and ordered the appellant to pay the amounts of Class 1A NICs required. HMRC had issued protective claims in the County Court in respect of the appellant’s tax liability for the tax years 2005/06 and 2006/07 to prevent them becoming time-barred, but did not oppose the FTT’s decision to extend time to allow the appellant to appeal. The tribunal directed the parties to attempt to agree figures in the light of its directions. The appellant’s appeal was allowed in part.

Exel Computer Systems PLC v Commissioners for Revenue and Customs [2018] UKFTT 346 (TC)

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Written by Julian Harris

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