SE23104 - Car benefits: price of the car as regards a year - imported cars

Section 168A ICTA 1988

Before reading the text that follows this paragraph, ensure that you are familiar with

• the general introduction to the calculation of price of a car as regards a year at SE23100
• the flowchart setting out the steps involved in calculating the price of a car as regards a year at SE23100a.

Sometimes, the car made available to an employee is one that has been purchased abroad, either in an individual transaction, or by a firm that specialises in bringing to the UK for its customers cars from other countries (frequently other members of the European Community). (A business importer of this type is generally a particular type of car dealer or seller and is quite different to the “importer” envisaged by section 168A(2) (see SE23101).

The fact that a car has been brought to the UK from abroad makes no difference to the approach outlined in SE23100 and SE23101 to establishing the price of the car. The legislation is framed entirely in terms of

• Finding the single UK list price, if there is one, or
• Calculating the notional price that corresponds to the price that would have been the UK list price if there had been one.

There is nothing in the words of the legislation to suggest that any different approach might be taken if the car has been bought overseas - whether or not at a lower price.

So the first question to ask about any car bought abroad is whether it is one for which there is a UK list price.

• If there is a UK list price, then clearly that is the price for car benefit purposes wherever the car was bought.

But there may be no UK list price, perhaps because the car is left hand drive, or because it is a model not introduced into the UK market. Where there is no UK list price for a particular car, we must use its notional price instead. Remember, the notional price is the price we would reasonably have expected the UK list price to be for an equivalent car, had there been a UK list price – see SE23140.

An equivalent car for this purpose is a car of the same kind as the relevant car with accessories equivalent to the qualifying accessories available with the relevant car at the time when it was first made available to the employee.

The inclusive price is the price inclusive of any charge for delivery by the manufacturer, importer or distributor to the seller’s place of business and of any relevant tax. “Relevant tax” includes any customs or excise duty, any tax chargeable as if it were a duty of customs and any VAT.

It clearly follows from all of the above that a simple conversion of an overseas list price into sterling is unlikely to result in a figure which equates to the price which might reasonably have been expected to be the UK list price. Depending on the circumstances in the overseas country, the sterling equivalent of the overseas list price could result in a sterling figure which is either higher or lower than the price which might reasonably have been expected to be the UK list price. We would of course calculate the price of the car for car benefit purposes on the correct statutory basis irrespective of whether conversion into sterling of an overseas list price gave rise to a higher or lower figure than the correct amount.

So if the notional price of a car purchased overseas cannot be arrived at simply by converting the overseas retail price into sterling, how do we calculate it ?

There is no single method of calculation which will result in the right amount in all cases. A couple of examples of the approach to identifying what we would have expected the UK list price to be are set out at example SE23187. These examples are not meant to cover all possible scenarios, and other methods may be appropriate, depending on the particular facts and circumstances.