HMRC has released guidance about how company cars should be handled during the coronavirus lockdown.

The guidance says that if employees are furloughed or working from home, and still have their company car, the car should be treated as being made ‘available for private use’ during this period. This is the case even if the  employee is instructed to not use the car or asked to take a photo of the mileage both before and after a period of furlough. It is the case even if the employee is unable to physically return the car or the car cannot be collected from the employee.

Where restrictions on movement applies because of coronavirus and prevents the car from being handed back or collected, HMRC will accept that a company car is unavailable in the following circumstances:

• where the contract has terminated – from the date that the car keys (including tabs or fobs) are returned to the employer or to a third party as instructed by the employer
• where the contract has not been terminated – after 30 consecutive days from the date that the car keys (including tabs or fobs) are returned to the employer or to a third party as instructed by the employer

The return of keys means that a car cannot be driven in any circumstances even if it is still in the possession of the employee.

HMRC also recognises that following relaxation of coronavirus restrictions, it may take some time to collect cars where contracts have been terminated. As long as your employee continues to have no access to the keys until the car is collected from them, HMRC will still regard the car as being unavailable.