Fleet News

Tax code errors to cost drivers dear

UP to one in six company car drivers' tax codes are expected to be incorrect this year – leaving many drivers facing the prospect of a hefty tax bill to correct the error.

Last year when the new carbon dioxide-based company car tax system was launched, 17.5% of company car coding notices issued by the Inland Revenue were wrong. But business and financial advisers Grant Thornton predict that a similar number will also be wrong this year and it is warning company drivers and fleet managers to check their codes urgently.

Senior tax partner Mike Warburton said: 'The message is simple. It makes sense to double-check the code you have been given, particularly if the benefit has been estimated.'

The company said the consequences of an incorrect coding notice could be dire. At worst, drivers could be underpaying tax and will be hit with a demand to settle up the underpaid tax at the end of the tax year.

Warburton believes drivers of large, energy-inefficient cars are most likely to receive an incorrect tax code.

He said: 'Since the new car benefit calculation is based on the list price of the vehicle multiplied by a percentage according to the level of the car's carbon dioxide emissions, owners of vehicles where no carbon dioxide emissions are available, or in circumstances where the computer does not recognise the rates that are entered, are most at risk.

'In these situations, the computer is likely to have under-estimated the benefit as 15% of the list price, but the correct benefit could be as much as 35%.'

The company added that in cases where the tax benefit has been estimated, a leaflet should have been sent out with the coding notice explaining the problem and requesting the individual to send the exact car details to them.

Mike Warburton said: 'Unfortunately, in many cases the leaflet was simply not sent. The Inland Revenue has apologised for the errors made and a second leaflet should be issued shortly.'

A spokesman for the Inland Revenue said: 'We're not too sure where Grant Thornton got its figures, but we would encourage all company car drivers to check their tax codes and alert us immediately to any discrepancies. We want people to pay the right amount of tax.'

Leave a comment for your chance to win £20 of John Lewis vouchers.

Every issue of Fleet News the editor picks his favourite comment from the past two weeks – get involved for your chance to appear in print and win!

Login to comment


No comments have been made yet.

Compare costs of your company cars

Looking to acquire new vehicles? Check how much they'll cost to run with our Car Running Cost calculator.

What is your BIK car tax liability?

The Fleet News car tax calculator lets you work out tax costs for both employer and employee