Directors’ business use of company assets: Rockall v HMRC

It is a common misconception that only the private use of a company asset can give rise to a taxable benefit. Owner-managers, who invariably have power and control over assets, need to be particularly aware that business use of a company asset may give rise to a taxable benefit.

The First-tier Tribunal (Tax Chamber) has recently held that the use of company assets by owner-managers for business purposes gave rise to a taxable benefit. It determined that the assets (a yacht, jewellery and antique clocks) were acquired and used for business and not private purposes.

In this case, the owner-managers were entitled to a tax deduction for the yacht, but not for the jewellery and clocks. While the cost of the yacht would have been incurred in the performance of duties and as an obligation of employment, the cost of the jewellery and clocks would only have been incurred to better perform those duties.