Fleet News

Whitechapel reassures fleets – ECO schemes should be safe

THE European Court of Justice ruling on VAT fuel reimbursement payments will not impact significantly on car ownership schemes, despite the widespread industry concern that the proposed ECJ changes will cost British fleets £1.2billion, Adam Trevaskus, head of Whitechapel has claimed.

Trevaskus is adamant that the proposed VAT changes will not have any major financial impact on car ownership schemes, as they are not dependent on VAT reimbursements on fuel charges to generate financial savings or gain for the business or fleet driver.

He said: ‘Rather than generating savings through fuel expenses, car ownership mitigates benefit-in-kind (BIK) taxation and uses the Inland Revenue’s Approved Mileage Allowance Payment (AMAP) system to provide long-term financial savings for businesses and drivers.

‘Therefore, the proposed changes will not have a financial impact on companies operating structured schemes – those developed in line with business objectives and fleet profile and supported with the necessary financial, accountancy, PAYE and HR infrastructure.’

Although the VAT changes will not financially compromise car ownership schemes, Trevaskus warned fleet operators against making any rash decisions and opting for quick-fire solutions or switching fleet policies.

He added: ‘Similar to most fleet policies, the financial success of car ownership is dependent on collating accurate driver mileage. However, for those schemes that are reliant on VAT fuel reimbursements, the collation of driver mileage will become even more difficult as businesses will have to pay in advance for fuel to be able claim back VAT.’

Trevaskus claimed that as a result, there would be far less onus on drivers to log their mileage as fuel costs will not be coming directly out of their expenses, placing an even greater responsibility on companies to record driver mileage.

He said: ‘The proposed VAT changes have prompted talk of corporate credit cards, fuel cards, fuel agreements with fuel suppliers and switching fleet policies as potential methods of reducing the reimbursement losses.

‘Although these are all feasible and practical options and companies are right to consider what steps they can take to prepare for the proposed changes, they should not lose sight of why the ECJ considers the changes necessary.

‘Ultimately, it is the loose recording of driver mileage that has brought the VAT mileage reclaim system under scrutiny and fleet operators should remain focused on the accurate recording of driver mileage.’

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