This Content Was Last Updated on February 9, 2017 by Jessica Garbett


Sometimes personal items are contracted for in the company name; in other circumstances the opposite may occur – personal contracts exist for company names.

In other circumstances people may change their mind about whether an item should be company or personal.

A regular example of this is something like a car lease, health insurance or gym membership entered into in company name and then with the BIK (Benefit in Kind) is fully appreciated the director decides to bear the cost personally, often by a charge to Directors Current Account (DCA).

A case of this nature has come to the First Tier Tribunal recently (FTT).

A car lease, in company name, was charged to DCA, to avoid BIK.  HMRC assessed the director based on this being a company provided benefit, he appealed, and although he won in part on a procedural issue around discovery/time limits, on the substantive issue he lost.

The conclusion is that “convenience” re-allocation of items, ignoring the name on contracts, is a risky area and can lead to unexpected tax assessments if HMRC audited.  bear in mind that HMRC audits are becoming increasingly less common so arrears can easily build up over a period.  Generally HMRC can assess for current year and four prior years.