A LEADING fleet expert has criticised the Government over its approach to the advisory fuel rates scheme for company cars, labelling it ‘a nonsense that bears no relation to the real world’.

It follows last week’s announcement of new advisory fuel rates for reimbursing company car drivers for the cost of fuel used for business mileage.

The Government has caused controversy by providing the biggest rises for the largest-engined petrol cars for the second time in a row.

Members of the North West regional meeting of fleet operators’ association ACFO heard that the rate change was the first time since 2002 that a rise had been introduced for vehicles with engines of less than 2.0 litres, while petrol cars over 2.0 litres had received a four pence per mile rise in the same period.

Dennis Dugen, regional secretary, told members of the meeting last week: ‘The rate rises reflect the comments of drivers who say they are not getting enough in reimbursement to reflect their fuel costs.

‘But these rates are totally inappropriate for the current vehicles that fleets operate anyway.’

The advisory fuel rates are based on broad assumptions about engine size and fuel type, with engines of more than 2.0-litres getting the largest payment.

A spokesman for HM Revenue & Customs (HMRC), which sets the rates, said: ‘Employees are entitled to tax relief for the actual cost of fuel used on business mileage, but to make life easier for all, HMRC sets advisory rates which it will accept as, on average, reflecting fuel costs without giving rise to a tax or NICs liability.’

He added: ‘When reviewing the rates, HMRC builds in a 10% reduction in the official fuel consumption figures to take account of real driving conditions and lower fuel economy for older cars, but the rates have to apply to all company cars. The rates are only advisory and employees do have the option of reverting to the statutory method of claiming reimbursed expenses, keeping the necessary mileage records and petrol or diesel receipts.’