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Exel Computer Systems: car fuel benefit and the ‘fair bargain’ principle

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In Exel Computer Systems Plc v HMRC, the taxpayer company required employees to pay in full for private use fuel; however, the extended periods taken to make good the expense meant that the exemption in ITEPA 2003 s 151 from the car fuel benefit charge was not available. The ‘fair bargain’ defence also failed, as an independent third party would not be given time to pay for fuel, unless he or she paid interest. The case has implications for every sale by an employer company of an asset (e.g. shares in the company) to an employee on interest-free deferred payment terms.

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