In Harrison Solway Logistics Ltd v HMRC [2019] TC06956 the First Tier Tribunal allowed appeals against Benefit in Kind charges for company cars where the directors repaid the leasing costs of those cars to the company.

The case related to tax years 2010/11 to 2013/14 when the applicable legislation, ITEPA 2003 s114, directed that the cash equivalent of the benefit should be treated as earnings. 

The company leased cars which were provided to two directors, and also paid for private fuel. 

The lease and fuel costs were posted to to the directors' overdrawn loan accounts.

HMRC sought to charge a benefit in kind on the directors on the grounds that:

  • Posting the lease payments to an overdrawn loan account did not adequately discharge the benefit
  • There was no transfer of property and the lease agreements forbade any such transfer without the consent of the lessor
  • Company fuel cards were made available and not reimbursed
  • The Apollo Fuels decision was not in point as in that case there was a further lease from the employer to the employee on commercial terms
  • HMRC were prepared to deduct the value of the lease payments as a capital contribution

The company argued that:

  • There was an oral agreement and an implied arrangement between the company and directors that property was passed to the directors
  • All costs in relation to the vehicles were borne by the directors through their loan accounts
  • The directors received no overall net financial benefit

The tribunal agreed with the company:

  • The Apollo judgment applied in that it confirmed that there could only be a charge to income tax if a benefit was conferred and in this case it wasn't
  • The change in legislation following the Apollo judgment was not retrospective so no charge could arise as a result
  • There was no reason not to take the directors' loan account payments into account, and no relevant difference between an overdrawn loan account and one which was not overdrawn.


The tribunal also mentioned that if there had been a car benefit, they would not have found that the loan account deductions amounted to payments for private use: there was no evidence that the company had required the directors to make these payments or, that they were in fact for private use. 

This case may have little bearing in the future as following the Apollo Fuels Ltd case changes were made to legislation to remove the reference to the benefit of the car and to clarify that there is no requirement for the any benefit to actually transfer to the employee in order for a benefit in kind charge to arise.

Our guides

Company cars and Car fuel benefit charges


Harrison Solway Logistics Ltd v HMRC [2019] TC06956

Apollo Fuels Ltd v HMRC