This is not perhaps a subject of wide interest but the arguments in G R Solutions Limited v HMRC TC1928 raise some interesting points of a wider nature.  

A company director purchased a car and sold a 90% share in the car to the company. HMRC said that the company had to pay Class 1A contributions on the basis that the company had made the car available to the director by reason of his employment.  

The director said the car had not been made available to him. He was a joint owner and his enjoyment of the car derived from his joint interest and not his employment. The car was already available to him by reason of his ownership rights so it could not be regarded as having been made available to him by the company which had only subsequently acquired a partial interest.  

HMRC did not agree. They said that the company had made it available to him. They kept repeating that – but they did not say why. The thrust of their argument seemed to be that the director had 100% use of the car, despite owning only 10% and that it had been made available. (That sounds like an assertion of fact – not an argument – but never mind. In any event, it cannot possibly be right. The director did not have 100% use of the car – self evidently he only drove it part of the time). The Tribunal took the view that the car was an indivisible asset and if both the employer and the employee want to use the car at the same time, it is not possible for part of the car to go to one destination and part of the car to go to another. Therefore when the employee uses the car for private purposes, the employer’s share of the car is being made available to the employee at that time.

This really does not work. That is doing nothing more than to describe the nature of an indivisible asset. The joint owners are perfectly capable of using the asset at different times. Just because I want to use the bathroom in my house (thereby precluding the other joint owner of using that part of the house at exactly the same time), this does not invalidate the joint ownership. The whole essence of joint ownership is that the use of the asset is subject to the concurrent use by the joint owner.

I appreciate that the taxpayers argument may drive a coach and horses through the car benefits legislation, but it might have been better to amend the rules rather than to adopt such an interpretation.