Fleet News

ECOS under attack over saving claims

ALTERNATIVE company car schemes are in the firing line again, with one company accusing advisers of conducting a 'smoke and mirrors' operation to convince fleets that money can be saved.

The accusation that schemes do not generate the savings claimed for either the employer or the employee are certain to provoke angry reactions from suppliers in this industry.

Employee car ownership schemes offer the equivalent of a company car, but without the tax burden, by transferring ownership of the vehicle to the employee.

Already several companies specialising in offering employee car ownership schemes (ECOS) have strongly defended them, although they admit that not every company will benefit.

But Black-i Vehicle Management managing director Nick Brown has added fuel to the fire.

He said: 'Called in by a fleet to recommend vehicle funding routes, professional advisers, perhaps promoting their own alternatives to the company car, are hardly going to advise contract hire packages as they will potentially be losing ongoing large fees.

'The savings promised through an ECOS and similar company car alternatives assume that once a scheme is implemented there are no ongoing administration costs. However, there are significant costs because the Inland Revenue demands such tight controls that professional advisers must be employed.'

Nick Sutton, managing director of a company which specialises in alternative company car schemes, described Brown's view as 'blinkered'.

'When we visit companies to discuss implementing a plan we will say from the outset if we do not believe they will benefit and that does happen,' Sutton stressed.

Black-i's view is blinkered. Companies do not need to spend a lot of money on professional advisers if they get a specialist company in to do the work for them.

The biggest aspect is capturing and recording drivers' mileage but that using the correct software and having the right policy and management controls in place make this easy – and it is something fleets should be doing anyway.'

The row comes soon after an Inland Revenue announcement that 250,000 drivers have 'disappeared' from the company car parc in the past few years (Fleet NewsNet, May 6, 2004).

As a result, civil servants said they would collect evidence of the causes of the opt-out, including the effect of approved mileage allowance payments (AMAPS), a cornerstone of many opt-out schemes.

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