[2010] UKFTT 630 (TC)

TC00869

Appeal number: TC/2010/03602

Appeal against car and fuel benefit charges arising under Section 114 of the Income Tax (Earnings and Pensions) Act 2003- the conditions of Section 167 of the Income tax (Earnings and Pensions) Act 2003 were not met and vehicles were not pool cars

FIRST-TIER TRIBUNAL

TAX 

	PRINCE EREDIAUWA	Appellant

	- and -

	THE COMMISSIONERS FOR HER MAJESTY’S
	REVENUE AND CUSTOMS	Respondents

		TRIBUNAL: 	S.M.G.RADFORD (TRIBUNAL JUDGE)							A.P.C.HUGHES		

Sitting in public at Holborn Bars, London EC1N 2NQ on 12 September 2010

The Appellant did not attend but agreed in writing that the appeal should go ahead in his absence

Helen Thorn and Nicola Parslow for the Respondents

© CROWN COPYRIGHT 2010

DECISION

1.	This is an appeal against the discovery assessments made by HMRC on the Appellant following an Employer Compliance review into Global House Facility Management Limited (“the Company”) for the tax years ended 5 April 2006 and 5 April 2007 in amounts of £5,810.40 and £9,156 respectively in respect of his liability for car and fuel benefits.
Background and Facts
2.	HMRC carried out the Employer Compliance Review on 3 July 2007. Following the review HMRC found several areas which required further investigation.
3.	The Company had provided the Appellant with vehicles in each of the tax years under review. They provided him with a Land Rover S586 MJH which was purchased in August 2005 and used by the Appellant until it was replaced by a Range Rover P1 GHG in June 2006.
4.	The Appellant claimed that the vehicles were pool cars and therefore exempt from the car and fuel benefit charges however correspondence received from the Company and the Appellant suggested that this was not correct.
5.	Section 167 of the Income Tax (Earnings and Pensions) Act 2003 (“ITEPA”) defines the conditions for a car to qualify as a pool car and the Appellant was asked to demonstrate that these conditions had been met.
6.	Section 167 (3) of ITEPA states that in relation to a particular tax year a car is included in a car pool for the use of the employees of one or more employers if in that year – 
(a)	the car was made available to, and actually used by, more than one of those   employees.
7.	A letter from the Appellant dated 15 February 2008 stated that the Land Rover S586 MJH was used by him until it was replaced by the Range Rover in July 2006. It was a designated pooled car but no one else was available to use it as staff that needed cars for official use had other pool cars available.
8.	Section 167 (3)  of ITEPA continues –
(c)	the car was not ordinarily used by one of those employees to the      exclusion of the others.
9.	A letter dated 14 May 2009 from the Company’s general manager, John Underwood stated that only one of the Company’s vehicles was used solely by one person and that was the vehicle used by the Appellant.
10.	The Company accepted that the vehicles were not pool cars and agreed to pay their Class 1A liability in respect of the car and fuel benefits arising to the Appellant.
11.	Section 114 of ITEPA states that a car benefit charge will apply in relation to a particular tax year if in that year the car is made available without any transfer of property in it to an employee or to a member of the employee’s family or household by reason of the employment and is available for private use.
12.	Section 118 of ITEPA states that a car or van made available in a tax year to an employee or a member of the employee’s family or household is to be treated as available for the employee’s private use unless in that year the terms on which it is made available prohibit such use and it is not so used.
13.	There were no restrictions on the use of the cars by the Appellant.
14.	Section 121 of ITEPA sets out the method to be used in calculating the amount of the car benefit.
15.	Sections 122 of ITEPA stipulates that the price of the car to be used in calculating the benefit is its list price and Section 123 of ITEPA defines the list price as the price published, that is the inclusive price for the car if sold in the United Kingdom, on the day immediately before the date of the car’s registration.
16.	HMRC wrote to the Appellant on 9 October 2009 informing him that on the basis of the information they had received the cars could not be regarded as pool cars. Accordingly he was liable for additional tax in respect of the tax years in question. The list price for each of the cars was £51,000 and therefore the car and fuel benefits amounted to £9,156 for each year.
17.	The Appellant asked for the decision to be reviewed and on 30 March 2010 the reviewing officer confirmed the decision that the vehicles were not pool cars and that the Appellant was liable for the car and fuel benefits. He stated however that as the Land Rover in question had only been purchased in August 2005 and therefore not available to the Appellant for the whole of the tax year in question the benefit charge for the year ended 5 April 2006 would be reduced to £5,810.40.
18.	The letter from the reviewing officer concluded that if the Appellant did not agree with his decision then the Appellant could ask an independent tribunal to decide the matter. In order to do so the Appellant had to write to the Tribunals Service within 30 days of the date of the review letter.
19.	The Appellant duly appealed to the Tribunal Service and his appeal was dated 14 April 2010 which was within 30 days of the date of the review letter.
20.	On the 8 April 2010 however, an officer from HMRC called at the Appellant’s home and left a letter stating that she had called to collect a debt of £23,023.52 or levy distraint on his goods or assets. Further if the debt was not paid in full, proceedings would be started in County Court to recover the unpaid amount.
21.	In the Northampton County Court on 28 July 2010 a judgment was made in favour of HMRC in amount of £27,048.26. 
22.	The Tribunal asked Mrs Parslow to find out further details concerning what constituted the amount of £27,048.26. Mrs Parslow telephoned the relevant office and informed the Tribunal that the amount was in respect of  £18,312 for two years of car and fuel benefits at £9,156 per year plus interest and charges. This amount was wrong as the amount sought in respect of 2005/06 had been reduced to £5,810.40
23.	On 6 October 2010 the Appellant wrote to HMRC. Referring to the County Court judgement he queried the reason for the case going to the County Court although the matter of the car benefits was under appeal. Since the first letter had arrived from HMRC he had been paying £200 per month to HMRC and he could not understand how the amount of £14,966.40 as notified in HMRC’s letter to him in respect of the car and fuel benefit had suddenly jumped to £27,048.26.
Findings
24.	The Tribunal found that the vehicles in question did not fall within the pool car provisions and so the car and fuel benefit charges were correctly made in amount of £5,810.40 for tax year 2005/06 and £9,156 for tax year 2006/07.
25.	The Tribunal found that the Appellant’s lack of fiscal knowledge had caused him to fall foul of Sections 122 and 123 of ITEPA which in his case became penal causing him to become liable to a car benefit charge based on the £51,000 list price of the cars which amounted to £9,156 per year. The independent dealer value of the cars having regard to their age was some £6,000 for each car meaning that the Appellant could have bought the cars for less than the tax arising on the car and fuel benefit.
26.	The Tribunal found that the County Court action had been pursued by HMRC as the result of an error on HMRC’s behalf. Not only was the amount sought incorrect as it had been reduced but the matter was under appeal by the Appellant. The Tribunal suggests that this matter be pursued by the Appellant through the complaints procedure and that the judgement is not pursued by HMRC. 
27.	The Tribunal were also concerned that in his letter of 6 October 2010 the Appellant claimed to have been paying £200 per month to HMRC for some time but no confirmation of this appeared in any of the papers presented to the Tribunal and it appeared that HMRC had not investigated where this money had gone. 
Decision	 
28.	Subject to our findings above the appeal is dismissed and the discovery assessments of £5,810.40 for tax year 2005/06 and £9,156 for tax year 2006/07 are hereby confirmed.
29.	This document contains full findings of fact and reasons for the decision. Any party dissatisfied with this decision has a right to apply for permission to appeal against it pursuant to Rule 39 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009.   The application must be received by this Tribunal not later than 56 days after this decision is sent to that party.  The parties are referred to “Guidance to accompany a Decision from the First-tier Tribunal (Tax Chamber)” which accompanies and forms part of this decision notice.

S.M.G.RADFORD

TRIBUNAL JUDGE

RELEASE DATE: 7 DECEMBER 2010