If you provide your employees with a car which you deem a pool car, then you must ensure that this is a pool car within HM Revenue & Custom’s definition. If HMRC enquire and find that the car should in fact be treated as a company car, then they will enforce this treatment, along with any corresponding tax, national insurance, penalties and interest.
A pool car should be made available to, and actually used by, more than one employee by reason of their employment. Also, it should not ordinarily be used by one employee to the exclusion of the others.
In the case of each of employee who uses the car, any private use of it should be merely incidental to the employee’s other use of it in that year, and a pool car would not normally be kept overnight at, or in the vicinity of, the employee’s home.
Employers should have a clear pool car policy and be able to demonstrate that all employees have been made aware of the restrictions on private use of the vehicle. A log of the car’s mileage should also be kept in order to show who uses the car, and in what circumstances.
If any of the pool car criteria are breached, then it could mean that there is a company car benefit which should be declared to HMRC in the normal way. It’s important to get this right, otherwise an HMRC investigation could prove costly. It you are unclear on the treatment then it’s best to consult your accountant.
Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.
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