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HMRC internal manual

Employment Income Manual

HM Revenue & Customs
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Employment income provided through third parties: anti-forestalling rules: early step within Section 554C(1)(a) or (d): employee car ownership schemes: fall-back charge

Schedule 2 paragraph 55 FA 2011

It may be that:

  • the relevant third person took an early step within Section 554C(1)(a) or (d) between 9 December 2010 and 5April 2011 (inclusive), but
  • if the Part 7A rules had been in force at that time, Section 554O (exclusions: employee car ownership schemes) would have prevented the early step from giving rise to Part7A income. See EIM45230 onwards.

If so, the fall-back charge in Section 554O could still apply.

If, by the end of the repayment date provided in the employee car ownership scheme (or, if later, 6 April 2012), the car loan has not been fully repaid, then the outstanding amount gives rise to Part 7A income.

That is, the Part 7A rules deem:

  • a relevant step to be taken at the end of that date giving rise to Part 7A income, and
  • A to be a relevant person within Section 554C(1) in respect of this step.

The subject of this notional relevant step is a sum of money equal to the outstanding amount of the car loan at the end of that date.