§ Mr. Macfarlaneasked the Chancellor of the Exchequer how many companies have an arrangement with the Treasury whereby the company pays all petrol bills for private vehicles driven by its personnel direct to the retailer; whether is is regarded as a tax benefit to the employee; and whether there is any loss of tax revenue.
§ Mr. Robert SheldonA company needs no arrangement with the Treasury for VAT or income tax purposes if it wishes to pay direct to the retailer all petrol bills for private vehicles driven by its personnel.
Companies registered for VAT are, in general, entitled under the law to reclaim the VAT on petrol which they purchase for the purpose of their businesses, but not the VAT on any petrol purchased for private purposes. So even if a company pays the retailer for all petrol supplied to vehicles driven by its personnel it may reclaim only the VAT on petrol used for business journeys; either the company or the employees themselves must bear the VAT on any petrol that is used for private motoring. The law does not, therefore, provide for any tax benefit to employees in respect of VAT. Pro- 288W vided that companies observe the rules, there is no VAT loss to the Revenue.
So far as income tax is concerned, where an employer pays on his employee's behalf petrol bills which the employee has incurred in the course of private motoring, that payment would be regarded as an emolument assessable to income tax under Schedule E.