A fuel audit completed by fleet and fuel management company Arval in 2004 revealed that many companies associate a fuel card with free fuel – and bosses believe the situation has not changed this year.
As a result, if a company decides to remove the benefit of free fuel for private mileage for employees, the fuel cards are taken away as well.
But they could soon be needed again. Arval says that if, as expected, UK law is amended to fully comply with the European Sixth Directive, fuel cards would be one of the only purchasing tools available that allow companies to recoup VAT from business fuel costs.
In March, Fleet News, in conjunction with Arval, launched the FuelWise campaign, to help fleet decision-makers deal with the impending change to the way firms deal with fuel.
The European Sixth Directive states that VAT on fuel can only be reclaimed if the purchase was made by a VAT-registered company. Therefore, if an individual purchases the fuel using a private card or cash, then the employer cannot reclaim VAT. Estimates vary, but a worst case scenario puts the cost to the fleet industry at £1.2 billion.
Mike Waters, head of market analysis at Arval, said: ‘Fuel cards should have no impact on an employer’s decision to make private fuel part of an employee’s flexible benefits package.
‘Fuel cards are an easy-to-use, VAT-approved management tool that ensures companies are able to manage and control fuel spend. By using mileage logging techniques, employers can easily make the split between business and private mileage for all drivers using a fuel card.’