Fleet News

Brown keeps ECO drivers waiting

FLEETS and their drivers have been left in the dark over the future of employee car ownership (ECO) plans after the government deferred an announcement until next spring.

And experts have called into question a figure quoted by the Treasury that will form the basis of its decision on how future ECO schemes are treated and taxed.

It was widely expected that an announcement would form part of last week’s pre-budget report – but chancellor Gordon Brown said it would instead be included in next year’s budget.

In a statement, however, the government said it would appear that current CO2 emissions of ECO cars were about 20g per kilometre higher than the average company car.

Such a claim would suggest the Treasury is planning to make major changes to the scheme, because the choice of higher-polluting cars by drivers was one of the main catalysts for the review.

But companies that offer ECOS are baffled as to where that figure came from, saying it does not reflect their own data, which was supplied to HM Revenue and Customs (HMRC) as part of a consultation this year.

Mike Lancey, senior consultant for Whitechapel, said: ‘We found the higher CO2 figures quoted in the pre-budget statement surprising as this does not reflect our experience or the figures we supplied.’

Bosses at Provecta said they were ‘perplexed’ by the claim, adding: ‘We operate the UK’s largest ECO fleet on behalf of more than 70 clients. Our data shows that the average CO2 is 168.5, compared with 167.1 for the UK’s company car fleet.’

Harvey Perkins, director of tax and people services at KPMG, said: ‘The assertion would seem to be very hard to prove or disprove – it is certainly not true of KPMG schemes where CO2 emissions, if anything, appear lower than the average.’

Industry experts say the delaying of an announcement has plunged the industry into uncertainty and is damaging relationships between fleets and their drivers.

John Lewis, director general of the British Vehicle Rental and Leasing Association, said: ‘Periods of uncertainty such as this only serve to disrupt employee/employer relationships unnecessarily.’

Tax expert Alastair Kendrick, a partner at Wilder Coe, said: ‘I am disappointed that a decision on ECOS has not been reached. HMRC said it was inundated with responses to its consultation, so what is left to learn?’

HMRC will now hold further discussions with the industry throughout early 2007. Gordon Calder-Jones, head of Masterlease ECO scheme Alto, said employers offering ECOs can still play a major part in influencing driver vehicle choice.

He added: ‘An ECO scheme should not be any less environmentally friendly than a contract hire scheme, as long as it is structured in the right way.’

James Salkeld, managing director of Opticar, said well-run schemes should have nothing to fear, adding: ‘Some schemes are completely beyond repair, mainly because the companies involved have delayed change or ignored HMRC direction, but many can be fixed and compliant within the tax year.’

A spokesman for HMRC said: 'One of the findings of the ECOS review was that the carbon emissions of an average ECOS car are around 20g per kilometre more than the average company car. This is included in the ECOS report which will be published at a later date.'

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