A taxpayer has lost his case at the Upper Tribunal (UT) concerning whether cars were made available to him by his company.  There was some respite for the taxpayer as the UT found that HMRC’s discovery assessment was not validly issued.

The taxpayer ran a Ford car dealership and had acquired two cars, one a rare Maserati and the other a Ford GT40, also a rare and expensive car.  The cars were used mainly for business purposes and the Ford GT40 had the car dealership’s name on it.  The cars were very rarely on the road and typically were not taxed.  The Ford GT40 would typically sit in the car showroom to attract customers.

The company was owned by the taxpayer and his wife, and they were both the directors of the company.  The company had a staff handbook and within the staff handbook it detailed that employees or offices could only use the cars with the permission of the board and when the cars were taxed.

The First tier Tribunal (FTT) had found that the cars were made available to the taxpayer as there were no effective restraints on the taxpayer using the cars whenever he liked, as he was a board member he could take the car whenever he wished and his wife would consent or acquiescence, generally without documentation.  The UT has upheld the ruling find that paying vehicle excise duty for the car and then submitting a SORN (statutory off-road notification) when he had finished using the were also no hinderance to the taxpayer using the vehicles.  It also held that there weren’t any grounds for interfering with the FTT’s findings of fact.

The UT did find that the discovery assessment was invalidly issued.  The discovery assessment was issued during the enquiry window.  The enquiry window is the period of 12 months from the filing of a self-assessment return (where filed on time), so in the instant case the discovery assessment was issued earlier than 12 months after the filing date.  The UT found that the relevant legislation didn’t allow discovery assessment to be issued within the enquiry window.  HMRC can simply open an enquiry and then issue a closure notice during this period.

The decision can be found at: Timothy J A Norton & Tim Norton Motor Services Ltd v The Commissioners for HM Revenue and Customs [2023] UKUT 00048 (TCC) – GOV.UK (www.gov.uk)

This is a useful judgement for considering how to manage cars that may be made available to employees or directors.  Care is required for making cars available to directors where the director had control of the board, such as in companies owned by spouses.  Where effective restraints can be proven this will show that the car wasn’t made available and no taxable benefit arose.

Please contact if you have any questions on income tax and employee benefits.  The above case highlights that ensuing employees and officers don’t have access to assets can remove charges to income tax and national insurance contributions.