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HMRC internal manual

Employment Income Manual

Car and car fuel benefits: fair bargain

The principle of “fair bargain” in relation to a benefit arose in the case of Mairs v Haughey (66TC273); see EIM21004. In effect, it achieves the same result as the statutory benefits scheme by a shorter route, informally setting off against the gross benefit charge the deduction available from that charge for the amount or item taken in exchange for the benefit provided and deciding that there is no benefit to charge.

It has no relevance to car and car fuel benefits (or to the parallel regime of van and van fuel benefit) because these benefits work in an entirely different way to general/residual benefits chargeable under section 203 ITEPA.

The amounts which can be deducted in arriving at the cash equivalent of the car and car fuel benefit charges are prescribed by statute and no other deduction is permissible. Any attempt to short cut the statutory benefit calculations will arrive at a non-statutory result and is therefore invalid.

Support for this view can be found in the decision of the First-tier Tribunal in the cases of Whitby and Ball v HMRC, TC00255.