Inadequate system

The taxpayer company provided cars and fuel cards to some employees. The vehicles were available for private mileage.

Members of staff were expected to maintain records of business and private mileage but after an employer compliance review HMRC said the system was inadequate: in some cases it was impossible to calculate business and private miles.

The inspector assessed the employer to class 1A National Insurance in respect of car fuel made available to employees for private mileage and also imposed penalties.

The taxpayer appealed.

The First-tier Tribunal decided the company’s system was “not sufficiently robust to ensure a reliable reimbursement by the employee of the cost of fuel for private purposes”.

There was no evidence to show the employees understood the difference between business and private mileage.

The tribunal said the fuel benefit charge should apply to employees apart from those who owned a car...