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05 April 2016
Issue: 4544 / Categories: Tax cases

CRC v Apollo Fuels Ltd and others, Court of Appeal, 17 March 2016

Car leased to employee by his employer on arm’s length commercial terms

Apollo Fuels leased cars to its employees for their work duties. They were given mileage allowance payments that they could set off against the rental costs. HMRC said the cars were a taxable benefit. The taxpayers appealed.

The First-tier Tribunal and Upper Tribunal found for the taxpayers so the case proceeded to the Court of Appeal.

The issue was whether an employee was liable to income tax on a car leased to him by his employer on arm’s length commercial terms including lease charges at full market value. HMRC argued that although the employee derived no financial benefit from the lease and paid a full price by way of lease charges he was still chargeable to income tax under ITEPA 2003 Part 3 ch 6.

The court concluded that the earlier tribunals had been right...

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