Reimbursing cost of damage whilst using car on business.

54and56

Hi,

I use my car for work purposes and claim mileage at the Civil Service rate. Whilst on a work trip I scraped the side of the car and it will cost €250 inc VAT to repair the damage.

Can this cost be invoiced to the company and VAT reclaimed by the company even though the car isn't owned by the company? I initially thought it couldn't but then I thought if the company rented or borrowed a van from a 3rd party and some minor damage occurred the company would be obliged to return the car in the condition it got it. You bend it you mend it and all that!!

Not the most challenging tax related question ever I'm sure

54and56

159 views and no opinions? Is this too boring a question or too tricky a question? Am I asking in the wrong forum?

Alan Shore

Je_suis_Jean wrote: »

159 views and no opinions? Is this too boring a question or too tricky a question? Am I asking in the wrong forum?

The mileage is to compensate you for the costs of running the car. Purchase, motor tax, insurance, fuel and repairs so no you can't invoice the company for the repair.

54and56

Alan Shore wrote: »

The mileage is to compensate you for the costs of running the car. Purchase, motor tax, insurance, fuel and repairs so no you can't invoice the company for the repair.

Thanks Alan,

So the mileage claim for use of the car to facilitate that particular trip was €58. The excess on the insurance policy is €250. Therefore the employee just has to suck up the fact he will personally be €250 out of pocket to repair the car?

TitianGerm

Je_suis_Jean wrote: »

Thanks Alan,

So the mileage claim for use of the car to facilitate that particular trip was €58. The excess on the insurance policy is €250. Therefore the employee just has to suck up the fact he will personally be €250 out of pocket to repair the car?

Is the car insured to be used for business purposes ?

bonyn

You're being paid mileage for the use of your private vehicle for work purposes. You take the good with the bad.
No harm asking your employer whether they have a policy to cover the damage, or will they pay half.
It's not a tax question btw. More a legal discussion or work & jobs question.

bonyn

emmetkenny wrote: »

Is the car insured to be used for business purposes ?

Doesn't make a difference. insurance excess will mean it's not worth claiming

TitianGerm

bonyn wrote: »

Doesn't make a difference. insurance excess will mean it's not worth claiming

My point is if he isn't insured under his private policy to drive his vehicle for work purposes, bar the usual to and from work, he is in breach of his policy.

challengemaster

Je_suis_Jean wrote: »

Hi,

I use my car for work purposes and claim mileage at the Civil Service rate. Whilst on a work trip I scraped the side of the car and it will cost €250 inc VAT to repair the damage.

I've bolded the important part. I don't know why you think anyone else should pay for you damaging your own vehicle.

deandean

Good question OP and very much a revenue / tax question.
A few years ago I had a few hundred euros damage caused to my private (estate) car while a large work related item was being loaded into it. I told my boss that the damage occurred wholly through use of the car for company business. i put a report to that effect on file and the company paid for the damage as a business expense.
IMO that was a fair and reasonable way of dealing with the problem.
However in your case, if you scraped the car while driving it might be better categorised as 'driver error' and you can't really say that you employer is in any responsible, you'll have to cover the cost from the hoge profit (joke) from business mileage payments.

54and56

emmetkenny wrote: »

Is the car insured to be used for business purposes ?

Yes, Social Domestic and Business Class B or whatever the correct terminology is i.e. it can be used for going to meetings but can't be used for carrying products for resale or something like that.

54and56

challengemaster wrote: »

I've bolded the important part. I don't know why you think anyone else should pay for you damaging your own vehicle.

Because I am capable of differentiating between me as an individual and me as an employee. If me as an individual using my car for personal purposes scraped it of course I'd have to pony up but if I'm driving a car (whether my own or someone else's) which is being used to facilitate my employers business then I expect my employer to indemnify me for any damage done whilst doing my job, accidents happen.

Another way to look at it is if another employee had been driving my car would he personally have to pay for the scrape? If not why should I? If this logic prevails then should a company ask two employees to allow the company use their cars for some business the employees would be better off swapping cars thus should either or both of them have an accident they won't be personally liable.

Sounds ridiculous if that's the way it works.

barneystinson

Simple answer to the question you've asked is yes - of course the employer can expense and recover VAT on the cost of repairing your car.

The interesting question is whether or not there is a BIK from them covering the cost.

54and56

barneystinson wrote: »

The interesting question is whether or not there is a BIK from them covering the cost.

If what they are doing is restoring the car to the condition it was in then I don't think there is any "benefit" to the employee. He is getting the car back the way he gave it. It's not like they are going to repair the damage and then slap on a nice new expensive set of alloy wheels and tyres as well.

kippy

Je_suis_Jean wrote: »

Because I am capable of differentiating between me as an individual and me as an employee. If me as an individual using my car for personal purposes scraped it of course I'd have to pony up but if I'm driving a car (whether my own or someone else's) which is being used to facilitate my employers business then I expect my employer to indemnify me for any damage done whilst doing my job, accidents happen.

Another way to look at it is if another employee had been driving my car would he personally have to pay for the scrape? If not why should I? If this logic prevails then should a company ask two employees to allow the company use their cars for some business the employees would be better off swapping cars thus should either or both of them have an accident they won't be personally liable.

Sounds ridiculous if that's the way it works.

The money you get to cover mileage covers insurance which is your responsibility.
The company do not own the car. You do. They have no insurable interest in it and as such I cant see why you should be able to claim off them. Indeed it would be intetesting to see how you would plan on proving the specifics of the accident if you were to try claim off them.

Shane Fitz

Je_suis_Jean wrote:

Can this cost be invoiced to the company and VAT reclaimed by the company even though the car isn't owned by the company? I initially thought it couldn't but then I thought if the company rented or borrowed a van from a 3rd party and some minor damage occurred the company would be obliged to return the car in the condition it got it. You bend it you mend it and all that!!

Did you not have to get a letter of indemnity from your insurer before the company would allow you claim for mileage?..
That is how it is before anyone can claim mileage in the public service.

barneystinson

Je_suis_Jean wrote: »

If what they are doing is restoring the car to the condition it was in then I don't think there is any "benefit" to the employee. He is getting the car back the way he gave it. It's not like they are going to repair the damage and then slap on a nice new expensive set of alloy wheels and tyres as well.

The benefit is that the employer is electing to pay what is a private expense for an employee. If they don't pay the €250 you'll have to, so that's your benefit there.

54and56

kippy wrote: »

The money you get to cover mileage covers insurance which is your responsibility.
The company do not own the car. You do. They have no insurable interest in it and as such I cant see why you should be able to claim off them. Indeed it would be intetesting to see how you would plan on proving the specifics of the accident if you were to try claim off them.

Not sure what insurable interest has to do with it. By your logic if a company employee whilst out on a delivery drops a parcel onto a table and in so doing smashes the screen of a phone belonging to someone unconnected with the delivery the company isn't liable because it doesn't have an insurable interest in a strangers phone. Insurable interest and being liable for damage you cause are not necessarily the same thing are they?

The claim bit is quite easy. Car had no scrapes when the company started using it. Car returned from company use with scrapes as a result of the company employees accident. Employee reported the accident at the time. Management inspected the scrapes and accept that they are newly created. They don't dispute that the scrapes occurred whilst the vehicle was being used on company business. QED

54and56

Shane Fitz wrote: »

Did you not have to get a letter of indemnity from your insurer before the company would allow you claim for mileage?..
That is how it is before anyone can claim mileage in the public service.

Not that I'm aware of no. Can you elaborate?

54and56

barneystinson wrote: »

The benefit is that the employer is electing to pay what is a private expense for an employee. If they don't pay the €250 you'll have to, so that's your benefit there.

Its only a private expense if the Employer isn't liable.

kippy

Je_suis_Jean wrote: »

Not sure what insurable interest has to do with it. By your logic if a company employee whilst out on a delivery drops a parcel onto a table and in so doing smashes the screen of a phone belonging to someone unconnected with the delivery the company isn't liable because it doesn't have an insurable interest in a strangers phone. Insurable interest and being liable for damage you cause are not necessarily the same thing are they?

The claim bit is quite easy. Car had no scrapes when the company started using it. Car returned from company use with scrapes as a result of the company employees accident. Employee reported the accident at the time. Management inspected the scrapes and accept that they are newly created. They don't dispute that the scrapes occurred whilst the vehicle was being used on company business. QED

Why would ANY company pay you mileage AND cover your car for damage?
Thats not my logic, thats yours.

Management would be exceptionally foolish to set this precedent.

54and56

kippy wrote: »

Why would ANY company pay you mileage AND cover your car for damage?
Thats not my logic, thats yours.

Management would be exceptionally foolish to set this precedent.

Because mileage only covers the cost of travel, it doesn't cover the cost of anything over and above that. Mileage reimbursement isn't the same as a commercial hire a la hiring a man with a van in exchange for €400 a day or whatever. If it was and the van company employee damaged their van during the day that would be their responsibility to take care of.

Mileage is more akin to hiring a car from Hertz. If a company hires a van for €100 per day but doesn't bring it back the way they got they have to pay the excess between €0 and when the Hertz insurance policy kicks in, usually €250 or €500. That's what I'm saying the company should pay i.e. the excess of my insurance policy which happens to be 100% of the anticipated repair cost in this instance.

And, in relation to your assertion that management should stick up two fingers to an employee kind enough to allow his private vehicle to be used for company business in exchange for mere mileage rather thus saving the company the cost of a commercial hire my counter argument is that should management follow your advice they would effectively cut off their nose to spite their face as no one would ever bother facilitating their requests for use of private vehicles ever again.

kippy

Je_suis_Jean wrote: »

Because mileage only covers the cost of travel, it doesn't cover the cost of anything over and above that. Mileage reimbursement isn't the same as a commercial hire a la hiring a man with a van in exchange for €400 a day or whatever. If it was and the van company employee damaged their van during the day that would be their responsibility to take care of.

Mileage is more akin to hiring a car from Hertz. If a company hires a van for €100 per day but doesn't bring it back the way they got they have to pay the excess between €0 and when the Hertz insurance policy kicks in, usually €250 or €500. That's what I'm saying the company should pay i.e. the excess of my insurance policy which happens to be 100% of the anticipated repair cost in this instance.

And, in relation to your assertion that management should stick up two fingers to an employee kind enough to allow his private vehicle to be used for company business in exchange for mere mileage rather thus saving the company the cost of a commercial hire my counter argument is that should management follow your advice they would effectively cut off their nose to spite their face as no one would ever bother facilitating their requests for use of private vehicles ever again.

Do you claim for a portion of tyres, maintenance and services?
Ive never heard of what you are asking for to be in operation in practise and I can see why.

54and56

kippy wrote: »

Do you claim for a portion of tyres, maintenance and services?

No, that's why it's called "Mileage". It reimburses you the marginal operating costs ( petrol, tyres, oil, maintenance etc) and nothing else.

Liability for the cost of an accident whilst being used by the company, in particular the excess not covered by the employees insurance policy, is what I'm talking about.

Stheno

Je_suis_Jean wrote: »

No, that's why it's called "Mileage". It reimburses you the marginal operating costs ( petrol, tyres, oil, maintenance etc) and nothing else.

Liability for the cost of an accident whilst being used by the company, in particular the excess not covered by the employees insurance policy, is what I'm talking about.

But the accident/damage was caused by you, driving your own car, insured under your own policy.

If you were injured in a crash caused by you while driving for work purposes would you expect the company to pay your medical bills?

54and56

Stheno wrote: »

But the accident/damage was caused by you, driving your own car, insured under your own policy.

If you were injured in a crash caused by you while driving for work purposes would you expect the company to pay your medical bills?

No, just the excess as in this case. Dave as the company would have to do if they hours a car from Hertz and an employee damaged it.

Stheno

Je_suis_Jean wrote: »

No, just the excess as in this case. Dave as the company would have to do if they hours a car from Hertz and an employee damaged it.

I can't see it happening to be honest.

It's not the companys fault you were careless and damaged your car.

kippy

Je_suis_Jean wrote: »

No, just the excess as in this case. Dave as the company would have to do if they hours a car from Hertz and an employee damaged it.

I really cannot see how or why that is comparable.

kippy

Je_suis_Jean wrote: »

No, that's why it's called "Mileage". It reimburses you the marginal operating costs ( petrol, tyres, oil, maintenance etc) and nothing else.

Liability for the cost of an accident whilst being used by the company, in particular the excess not covered by the employees insurance policy, is what I'm talking about.

It is to cover the operating costs of a car and that would include a portion per mile for tax/insurance/depreciation etc
Indeed IF you have to use Class 2 insurance (which many companies don't do any more) you can generally expense that additional cost to your insurance to your employers.

I don't know why the OP asked a question they seemed to have all the answers to.

all except the right answer anyway.

no liability on company here.

54and56

Stheno wrote: »

I can't see it happening to be honest.

It's not the companys fault you were careless and damaged your car.

Ok, if I had damaged someone elses property (No damage to my car) and they claimed €5,000 in compensation €4,750 of which my insurance company covered, would I still be expected to cover the insurance policy excess of €250 personally?

54and56

[Deleted User] wrote: »

I don't know why the OP asked a question they seemed to have all the answers to.

all except the right answer anyway.

no liability on company here.

Oohhh, who took the jam or of your donut?

I'm pretty clear on the question of liability as the company have accepted it, I'm just not sure on the tax element.

barneystinson

Je_suis_Jean wrote: »

Its only a private expense if the Employer isn't liable.

Exactly.The preponderance of opinion here seems to be that the company aren't liable (legally speaking).

The fact that they are willing to cover a cost accruing to you by virtue of the fact that your insurance policy has an excess on it, is a matter of choice for them in relation to a cost that is personal to you.

I'm sure there are insuers who offer lower excesses at a higher premium (and higher excesses at a lower premium).

The logical conclusion of your argument here that your employer is liable, would be that if (God forbid) you caused a pile up and a huge amount of third party damage, you could turn around and say you're suing them for the cost rather than have a big claim on your policy, since they are liable...

54and56

barneystinson wrote: »

Exactly.The preponderance of opinion here seems to be that the company aren't liable (legally speaking).

The fact that they are willing to cover a cost accruing to you by virtue of the fact that your insurance policy has an excess on it, is a matter of choice for them in relation to a cost that is personal to you.

I'm sure there are insuers who offer lower excesses at a higher premium (and higher excesses at a lower premium).

The logical conclusion of your argument here that your employer is liable, would be that if (God forbid) you caused a pile up and a huge amount of third party damage, you could turn around and say you're suing them for the cost rather than have a big claim on your policy, since they are liable...

It's an interesting point. My initial reaction is I'd still only be after the €250 excess as the rest would be claimed off my personal insurance but then if my personal insurance premiums increased by €1,000 a year thereafter as a result of the massive claim would I be happy paying that? The answer I guess is yes because even if I was insured for work purposes on a work policy when the accident happened, if my driving caused it I'd have tiki declare that when renewing my personal policy and my personal premium would shoot up to reflect my accident history.

F412

Je_suis_Jean wrote: »

Not sure what insurable interest has to do with it. By your logic if a company employee whilst out on a delivery drops a parcel onto a table and in so doing smashes the screen of a phone belonging to someone unconnected with the delivery the company isn't liable because it doesn't have an insurable interest in a strangers phone.

The company isn't liable, the employee who dropped the phone is.

In your situation its your fault the car got scraped, the fact you were doing something for work is irrelevant. The company will not cover your excess and if they do they are very foolish as no well run company would.

54and56

F412 wrote: »

The company isn't liable, the employee who dropped the phone is.

You misread my analogy. The employee drops a parcel which breaks a strangers phone. Who is liable? If it was my phone that was broken I'd probably go after the company for compensation but maybe I'd be wrong about that. I'm open to correction as to whether the company would be liable for the employees actions whilst carrying out his job or the employee is personally responsible for any accidental damage which occurs during the performance of his role. If the the latter then it's clear I should pay for the damage I did to the vehicle whilst performing my job regardless of whether the vehicle is owned by me, a rental company or any third party but if it's the former and the company is liable for the repair costs of the damaged phone why would it not be liable for the repair costs of another asset (in this instance a car) damaged by an employee performing his job?

F412 wrote: »

In your situation its your fault the car got scraped, the fact you were doing something for work is irrelevant. The company will not cover your excess and if they do they are very foolish as no well run company would.

Thankfully they see the bigger picture and recognise that if they didn't agree to cover the excess that no staff would agree to allow their private cars to be used in future. Doing the right thing in this case costs the company €250 but will save them a multiple of that in the avoidance of van rental charges going forward.

The only issue I'm actually interested in is whether Rev Comm will view payment of the bill as BIK. Not a biggie either way but I think I've heard enough to be able to assert my claim that by the company paying for the repair I'm not receiving a benefit, I'm just being put back to the position I was in if the accident hadn't occurred.

Thanks for helping me tease it out.