Fleet News

Ford chief predicts fresh tax chaos

THE future of company car tax has been thrown into chaos amid claims from the boss of Britain's biggest car manufacturer that the Competition Commission will be calling for the scrapping of recommended retail list prices in its forthcoming New Cars Inquiry report. The claim comes from Ian McAllister, chairman and managing director of Ford of Britain, who believes the persistent attention paid by the inquiry to manufacturer recommended retail prices strongly suggests that the Commission will take an abolition line on RRPs.

The Commission's report is now on the desk of Department of Trade and Industry Secretary Stephen Byers, who is expected to publish the report and his response within the next month. The timescale puts Byers' response on a collision course with the Treasury as Chancellor of the Exchequer Gordon Brown is due to unveil long-awaited details of the new company car tax system to come into effect in 2002 in the Budget on March 21. The new tax system will be based on a vehicle's official list price graduated by its carbon dioxide emissions. Without a list price, it would fundamentally undermine the blueprint and would send the Inland Revenue back to the drawing board.

The commission signalled the possibility of recommending the scrapping of manufacturers' RRPs when it published its 'remedies statement' in October last year and McAllister believes the attention of the Commission to the list price issue in subsequent meetings and requests for information strongly implied that this would be a key area of its eventual report. 'The Treasury has always wanted RRPs because of company car tax, so it must have a fall-back,' said McAllister. 'We do believe that recommended retail prices will be the focus of the report and whether they should be prohibited.'

However, the Commission can only recommend and Byers is under no obligation to implement its suggestions. But, the DTI did outlaw recommended retail prices in the white electrical goods industry on the guidance of the old Monopolies and Mergers Commission - the forerunner of the Competition Commission. If the DTI adopts a similar strategy for the car market, the Inland Revenue would be forced to rethink completely the calculation of a company car driver's benefit charge. It could be based on a notional basis that would be a nightmare for the Inland Revenue to calculate, or a transaction basis that would favour fleets which achieved higher discounts.

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