Structured employee car schemes are surrounded by an air of mystery, even though they are a relatively simple idea.
Employers are effectively providing staff with the equivalent of a company car, but passing ownership to the employee, therefore avoiding benefit-in-kind tax. The saving in tax is combined with a monthly payment from the employer, which also reimburses the driver for covering business miles, using tax and NIC-free mileage allowance payments.
Put together, the payments are large enough to pay for a car through the driver's monthly salary. However, although such schemes are simple on the surface, the financial calculations behind them and the paperwork involved in obtaining approval from the Inland Revenue are daunting.
And because individual scheme providers have their own methods of putting together a scheme, they are incredibly protective of the methods they use to create their own model, hence the mystery.
Established in 1991, Whitechapel Corporate Services was the UK's first cash-for-car specialist, taking a consultancy approach to offering tailor-made fleet management packages.
It was created after a group of consultants came up with the idea for cost-effective car provision while sitting in a coffee shop in Whitechapel, London – hence the name. Its key principle is that the car is replaced with a cash allowance with finance, insurance and maintenance included, addressing any health and safety concerns directed at covering business miles in a private car.
As the first in the market, its name is often used when describing rival schemes in the industry, referring to them as 'Whitechapel-type schemes'.
After more than a decade, the product is not any less complex, but under new ownership there is growing determination to find new business and remove the cloak of secrecy surrounding the products.
Whitechapel was acquired by Lloyds TSB autolease in July 2002. The combined company has more than 150,000 vehicles under management and more than 40 years' experience in the market. Whitechapel currently has 20,000 vehicles, with an average customer size of 700 to 750 vehicles. Last year, despite the upheaval of the acquisition, it still launched 14 new schemes, celebrating a jump in fleet size of 35% since the Lloyds TSB autolease acquisition.
Key contract wins under its belt include John Lewis Partnership, MG Rover, Reebok, Pharmacia, ANC, Powerhouse and Nichols.
It has launched a programme recruiting specialist staff and introduced system enhancements, a greater emphasis on training and a wider product portfolio.
Adam Trevaskus, the new general manager of Whitechapel, believes the key to making structured personal car schemes a more widely accepted part of the vehicle funding market is through making them appear more approachable and user friendly. And this new approach is needed if ambitious growth targets are to be met.
Trevaskus said: 'In the past, there has been an air of mystery about the organisation, but we expect to be more open about our services.'
Instead of intellectual property remaining with a few employees, the infrastructure has been changed at Whitechapel to spread knowledge of the intricacies of the scheme more widely within the company. As more people understand the scheme, they can explain the benefits to more customers.
Trevaskus said: 'Our expectation is that Whitechapel will make up 20% of unit turnover at Lloyds TSB autolease. When Lloyds TSB autolease acquired Whitechapel, we knew it had potential. The fleet services available from Lloyds TSB autolease would fit into with Whitechapel's services to provide a wide-ranging strategic fleet cost control service. Employee car schemes are not a cure-all. They are part of an overall solution that includes a number of services, ranging from traditional contract hire to peripheral products, such as accident management.
'However, we say it is not the telling, it is in the doing, so making sure the scheme works for customers is a key priority.'
Following the recent investment, Whitechapel now employs 60 dedicated people, claimed to be the largest in its sector. Key stages in introducing the scheme to clients have been divided between different teams.
There is a business development team to get commitment from customers, followed by a consultancy team which works on feasibility and design, part of which is carried out free during initial discussions with customers.
Trevaskus added: 'We have recruited staff from the big four accounting firms. They have the skills to deliver, manage and implement this process as well as the expertise to review and improve existing schemes.
'We are working hard to dispel the mystique surrounding the car ownership concept and to build trust within the market that car ownership can be a mainstream proposition and not an off-the-wall alternative.'
Following this, an implementation team ensures the launch of the employee car ownership plan goes ahead smoothly, including working with employees to explain the benefits of the scheme. They are backed up by the account management team, which works on specific customer issues, such as quotations, orders and the delivery of cars.
While fleet decision-makers may view the launch of structured personal leasing as the most complex part of the scheme, one of the most important aspects is ensuring drivers are happy following the launch.
Trevaskus said: 'We have introduced processes of control that suit car ownership. For example, collection of payments from drivers is a complex area. As an example, you have to ensure the date of delivery of a new car and return of their old one is exactly matched, otherwise you risk early termination fees, which the driver has to pay.
'We have six staff dedicated to collections to meet the needs of employees and make sure there are no problems.'
He added: 'We have developed an infrastructure that supports the delivery of complex schemes. The wealth of experience within the company means a customer's transition to a car ownership scheme is not only smooth but it dovetails into wider business strategies.'
The company is also examining the potential of telematics systems which would automatically create a breakdown of business and private miles. Despite the complexities of such schemes, Trevaskus believes he can encourage fleet decision-makers to consider the Whitechapel scheme as just another part of the fleet funding toolkit.
He said: 'Lloyds TSB has extremely good controls and processes, which will give customers the confidence that we are going to deliver. Quite often, when employees see the savings available and the wider choice they will have, they are very keen to join the schemes.'
And part of the challenge will be to develop the product to take account of any taxation or other employment areas.
Trevaskus said: 'Put simply, it is still provision of a car. It is complex, but the savings are there and they could be savings provided as part of a wider vehicle provision package.'