CARS AVAILABLE FOR PRIVATE USE (Hansard, 15 July 1981)

§ The Chief Secretary to the Treasury (Mr. Leon Brittan)
I beg to move amendment No. 125, in page 58, line 39, at end insert— '(2A) After subsection (2) there shall be inserted— (2A) Where in any year a person is taxable in respect of the benefit of a car under this section, he shall not be taxable—

(a) under section 181 of the Taxes Act in respect of the discharge of any liability of his in connection with the car;

(b) under section 36 or 36A of the Finance (No. 2) Act 1975 in respect of any voucher or credit token to the extent that it is used by him—
(i) for obtaining money which is spent on goods or services in connection with the car, or

(ii) for obtaining such goods or services;

(c) under section 60 above in respect of any payment made by him in respect of expenses incurred by him in connection with the car.".'.

Mr. Deputy Speaker
With this it will be convenient to take amendment No. 129, in page 59, line 18, at end insert— '(8) Where in any year beginning on or after 6th April 1982 a car is made available to a person within the meaning of subsection (1) above:—

(a) no charge to income tax shall be made in respect of that car itself, or any of the incidental costs of maintaining it in a roadworthy condition, other than under this section; and

(b) the incidental costs of so maintaining a car include any sums paid to or put at the disposal of or paid away by the person mentioned in subsection (1) above and any other facilities in relation to any expenditure incurred by him in maintaining that car in a roadworthy condition but does not extend to any fuel provided to the said person in relation to that car or otherwise.'.

§ Mr. Brittan
This amendment is designed to remove the possibility that a director or higher-paid employee who is liable to a scaled charge in respect of a car or petrol might also be liable under the normal charging rules of schedule E and under the special rules applying to vouchers or credit cards or the special rules relating to reimbursed expenses. I commend it to the House.

§ Mr. Brittan
I beg to move amendment No. 126, in page 58, line 42, leave out 'paragraphs 2 to 5' and insert 'sub-paragraph (1) of paragraph 2 of Part II of that Schedule in a case in which sub-paragraph (2)(b) of that paragraph applies or by virtue of paragraphs 3 to 5 of that Part'. This amendment enables an employer who during any pay period first makes a car available or replaces a car available to an employee, who is liable to tax under section 64 of the Finance Act 1976 in respect of the benefit of that car, to calculate the amount of the car benefit for the pay period in which the car is made available or changed and apply PAYE to that figure without waiting for a notification from the inspector. It is, therefore, an easement of the position, and I commend the amendment to the House.

§ Mr. Brittan
I beg to move amendment No. 127, in page 59, line 13, leave out 'for which he must account' and insert 'which he is liable to pay'. This small technical amendment is designed to make it clear that the only amounts which can give rise to a charge on the director or higher-paid employee under the new 1312 section 64(7) of the Finance Act 1976 are amounts of tax in respect of car benefits which are ultimately to be paid by the employer and which the employer has been unable to recover out of payments of cash emoluments, out of tax repayments or in some other way from the employee.

§ Sir William Clark
I beg to move amendment No. 128, in page 59, line 14, leave out from 'shall' to end of line 18 and insert 'on notifying the Board of the amount of such unrecovered income tax, be discharged from any liability to account for it to the Board, and all such consequences shall follow as if there had been made on the employee on such date as he is notified by the inspector of the amount so unrecovered an assessment under Schedule E to the best of the inspector's judgment under which the amount of tax charged on the employee is the amount so unrecovered'. I am sorry, but the formality ends now. I do not think that we need spend too much time on this. If under the PAYE regulations an employee gets a benefit, from a car or whatever, and consequently that being added to his income means that because of his coding there is insufficient income the following month or week to repay the employer for the tax which is due on the increased benefit which comes in during the fiscal year, this should not be a liability on the employer. It should be for the Inland Revenue to collect it from the employee.

§ Mr. Brittan
This amendment is the same as that tabled by my hon. Friend the Member for Croydon, South (Sir W. Clark) in Committee. He will be familiar with the points that were raised then. To some extent, the point has been met by the draft regulations that have been placed in the Library and by Government amendment No. 127, which the House has just accepted. That amendment and the draft regulations will ensure that when an employer has made a mistake in good faith and has acted with reasonable care, but failed to apply PAYE correctly on the benefits, the inspector may direct that the unpaid tax be recovered from the employee, not the employer.
In those circumstances, I hope that my hon. Friend will not feel it necessary to press his amendment.

§ Sir William Clark
I am grateful to the Chief Secretary for that reply. However, I urge one point on him. I hope that if cases were brought to my right hon. and learned Friend's attention in which the Inland Revenue declared that the employer should pay PAYE tax which was the employee's responsibility—simply because of the benefits—he would deal with them sympathetically.
I am sure that hon. Members will agree that we should try to put measures into legislative form and should not leave matters to the discretion of departments such as the Inland Revenue. I shall be happy to withdraw the amendment if my right hon. and learned Friend gives the assurance that I have sought.

§ Mr. Brittan
I assure my hon. Friend that if such difficulties arise I shall consider them sympathetically.

§ Sir William Clark
I beg to ask leave to withdraw the amendment.