According to fleet management firm cfc solutions, fleets are ditching private fuel because of the heavy tax burden on it. In turn, they are then dropping fuel cards as well, which managing director of cfc solutions Jason Francis believes is a case of throwing the baby out with the bath water.
He said: 'Some fleets have abandoned fuel cards because they have abandoned free fuel but this is a false economy. The company fuel spend still needs controlling. This makes sense even if you have a large number of cash for car drivers.'
Jeff Woodward, UK retail fuel card manager for BP, added: 'How can you be sure that the fuel claims of your drivers are all that they seem? The simple answer is you can never be 100% sure.
'Allowing drivers to pay and reclaim the costs of their fuel opens up a host of ways for them to bend the rules.'
Francis agreed: 'Some of our customers have seen abuse on a fairly large scale. The best way of preventing this is by using a fuel card together with fleet software. Otherwise, you can be pretty sure that somewhere in your company, you are being ripped off.'
Francis called the pay and reclaim system 'uncontrolled and unwieldy', claiming that, as an example, it would be difficult with hundreds of receipts a month coming in to identify where an employee is filling up a second car every couple of weeks.
Last year, building materials giant Hanson scrapped fuel cards for 'pay and reclaim', and then reintroduced them within months. Meanwhile, the European Commission could drive the fleet return to fuel cards by denying companies the right to recover VAT on fuel bought by employees with their own money, even if it was for business journeys.
The EC claims VAT is only recoverable when goods pass from one VAT-registered business to another. When this chain is broken, as in the case of employees using their own money to buy fuel, VAT recovery is prohibited.
If the EC persists in its claim, companies operating 'pay and reclaim' schemes will lose millions of pounds in VAT revenue, unless they switch to corporate purchasing cards such as fuel cards.