Apollo Fuels was challenged over its employee car leasing scheme and won its appeal at the First Tier Tribunal (FTT) in 2012. That decision has now been upheld by the Upper Tribunal ([2014] UKUT 0095 (TCC)).

Apollo switched from company cars in 2003 after the CO2 rules were introduced. The employees began to lease the same cars from the employer at an arm’s length rental, a value that HMRC accepted. A mileage allowance set at a level for private cars was payable, but no cash changed hands: it was set off against the employees’ leasing costs each month.

HMRC claimed that the cars were still, in effect, company cars provided by the employer, so scale charges applied and Class 1A national insurance contributions (NICs) were due on the P11D values, while Class 1 NICs were due on the excessive mileage allowances.