Fleet News

Will the taxman step in?

EMPLOYEE-sponsored personal leasing and contract purchase schemes are set to boom - but the taxman may challenge schemes such as the Whitechapel Car Scheme, according to Hertz Leasing managing director Len Clayton. He believes that as employees appear to benefit from the bulk buying arrangements of their employers, the Whitechapel arrangements are 'a form of tax evasion'.

Whitechapel Corporate Services has taken expert legal advice and the Inland Revenue has given its blessing to the schemes introduced to date. But Clayton, also chairman of the British Vehicle Rental and Leasing Association's finance and leasing committee, said: 'The employer is making available a company car to employees at below normal market value. I think that it is extremely unlikely that the Inland Revenue will remain uninterested.' Clayton described the Whitechapel scheme as 'principally a financial device not a motor car device'.

The Inland Revenue interprets a company car as any car provided 'by reason of an individual's employment' to them or any member of their family or household. An Inland Revenue spokeswoman told Fleet NewsNet: 'We have not changed our interpretation of a company car.' However, she said a number of personal leasing schemes were currently on offer and added: 'If the property of the car does not pass to the employee then there is generally a car benefit charge. If the property passes to the employee, so effectively they own the car, there may not be a charge.'

Clayton also questioned how long manufacturers would continue to supply vehicles on volume related bonus terms under what were, in effect, private transactions: 'At the moment they may shut their eyes to such arrangements because they are getting the volume they desire. But eventually, when other staff notice, they may have to look at their supply arrangements.'

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