Fleet News

Fleets to shape future of ECOs

HM Revenue & Customs (HMRC) has asked fleets to help it develop its future tax policy, especially regarding employee car ownership (ECO) schemes.

The call, made at the Fleet News Double Jeopardy Conference last week, follows the recent announcement in the Budget that the Government was planning a review of its tax position on ECO schemes.

The industry is divided over whether drivers moving into the schemes choose more polluting cars because it may not affect their tax bills.

As a result, HMRC policy adviser Elizabeth Ward appealed for fleets to get in touch so that the environmental effects of the myriad schemes could be compared with those of company cars.

In a statement released by HMRC, the Government body said the review would look at how the schemes work, including financial arrangements, what factors have contributed to the expansion of such schemes and what impact they have on CO2 emissions and local air quality when compared to company cars.

Another area to be studied is whether ECO schemes offer an advantage to employees or employers that should be taxed as a benefit-in-kind and subject to National Insurance contributions.

Giving his view of the review, Alastair Kendrick, a tax partner at chartered accountants Wilder Coe, said: ‘It is interesting to see that the Revenue consider there is a growing interest in ECO schemes and this may be a major factor in the reduction of company cars since 2002.

‘While there remains an interest in ECO schemes I suggest that they do not account for the 400,000 reduction in company cars.

‘We have seen a move by many corporates to simply cash out of cars and while the recent duty of care issues may have impacted on this, there is still a considerable interest to move away from cars.

‘I do not know how the Revenue has got to its figure of 150,000 for ECO vehicles and it is difficult to determine how accurate this is.’

In a bid to get a clearer picture, HMRC will hold a series of meetings on June 6, 7 and 27 and any interested parties should email pa.harris@hmrc.gsi.gov.uk

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    Elizabeth Ward, speaking athe the Fleet News conference

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