PAS Notes

Graham Whitehouse

Car Unavailability

By Graham Whitehouse | 20 August 13 | In: Tax News

Car CO2 Emissions

When is a Car Unavailable?

When dealing with car usage, employers have the ability to report a period of ‘unavailability’ of a car that is allocated to an employee. However, caution needs to be applied when considering the use of this option, as HMRC has some strict guidelines for the term unavailable, which say that a car can be defined as unavailable in three main ways:

  • If the day in question falls before the first day the car is made available to the employee
  • If the day in question falls after the last day the car is made available to the employee
  • There is a period of 30 consecutive days when the car is not available to the employee

However, care needs to be taken when considering the above, as for the car to be deemed unavailable it also has to meet certain conditions:

  • The car has to be physically incapable of being used by the employee
  • The employee has to be unable to gain access to the car (for example, have no keys)
  • The employee can’t ask the person who has the keys to simply hand them over
  • The employee can’t ask the person who has the keys to drive them to locations of their choosing in the car

Examples

The following are correct interpretations of the rules:

  • A car is undergoing extensive repairs and is off the road for 5 weeks
  • An employee is leaving the country for 6 weeks, and hands back the keys of his company car to the fleet manager whilst away and the car is parked at the company premises.

However, the following would NOT constitute unavailability:

  • The employee is leaving the country for 6 weeks but does not hand the keys back to the fleet team
  • A husband and wife share a company car and use unavailability to apportion the benefit accordingly
  • The employee is long term sick and can’t drive
  • The employee is banned from driving
  • The car is undergoing repairs for 3 weeks

Summary

The use of car unavailability should only be used in exceptional circumstances, as the legislation is complex and not well defined (if a senior manager handed the keys back, would he still be able to gain access for instance?). In a majority of cases the best course of action would be to un-allocate and re-allocate a car via a P46 (car) when lengthy periods are concerned, this will avoid any doubt or confusion when completing the P11D for the employee, and will ensure HMRC legislative compliance.