UKFTT 98 (2010) Stanford Management Services Ltd & Ors v HMRC

Car Benefits - HMRC won

Case Summary:

The Directors wanted new cars which would be leased. If the lease agreement was made in the company’s name there would be very high tax and National Insurance liabilities given that the list price of each car was £70,000.

However the directors were advised that if the individuals were charged by the company with all the costs of the leases then the company was acting as nominee and there would not be the attendant tax consequences. The Directors personally paid all the costs of the cars, such as leasing, petrol, insurance, road tax, repairs and maintenance.

Among technical arguments they argued that the moral or common sense point of view was that as the Directors had paid the costs of the cars in full it was nonsensical that there should be a tax liability.

However, the legislation was not concerned with agency or any other law. It stipulated the correct tax treatment to be used when an employer provides a car for its employees. The contract was in the name of the company, the legislation was satisfied and so a benefit arose.