The ‘Overdrive’ case focused attention on the fact
that company directors and certain authorised employees can enter
into contracts to purchase goods and/or services on behalf of their
companies.
In the ‘Overdrive’ case, it was established that
for NIC purposes there should be no difference in the treatment of
fuel obtained by way of:
Moreover, the case established beyond doubt that, excluding any
petrol identified as being used solely for business purposes, NICs
were due in respect of any fuel purchased by any one of the above
methods.
The reason for this is that at the point of transferring
petrol from the pump into the tank of the car, the employee is
effectively entering into a contract with the garage to purchase
the petrol and to pay for it. The employee may at that stage
substitute their employer’s liability for their own by
offering payment via one of the options mentioned above.
While the case established the general rule that liability
for NICs arises, it also highlighted the fact that liability did
not arise if it was explained in advance
and it was accepted that the purchase was being
made on behalf of the company.
Under this arrangement, the employee must tell the garage
that they will be making the purchase as agent for their employer
before they enter into the contract to buy the petrol, and the
garage must accept that they are acting as their employer’s
agent. This was commonly known as “using the litany”.
The establishment of this ‘agency’ is sufficient to
render the employer liable to pay for the petrol bought.
The ‘Overdrive’ case centred primarily on fuel
purchased by way of employers’ credit cards and fuel agency
cards. However, the establishment of this ‘agency’
cannot be confined to purchases of fuel, nor to purchases made by
means of credit/agency cards.
