Fleet News

Stop 'tax leakage' first fleets told

Fleet operators are being advised to address ‘tax leakage’ and any unnecessary expenditures within their car schemes before embarking on cutbacks elsewhere.

“The sensitive and complex nature of the company car scheme means that it may not always be the first area for scrutiny, yet within it lurks the likelihood of tax leakage that is costing companies significant amounts each year,” said Peter Eldon, managing director Toomey Opticar.

“The good news for company car scheme operators is that substantial savings can be realised without devaluing the car benefit for drivers.”

He says that many businesses still suffer avoidable tax bills because inefficient fleet administration forces them into costly and complex end-of-year mileage reconciliation exercises to align approved mileage allowance payments (AMAP) used against actual business mileage driven.

“Many schemes estimate AMAP at the start of the year based on expected business mileage.

"With HM Revenue & Customs (HMRC) requiring the matching of monthly records to prove that AMAPs usage is accurate and timely, the inevitable result is a year-end reconciliation which ultimately reveals AMAP overpayments – resulting in a hefty payment back to HMRC,” he said.

“You can double that amount by including the unrecoverable AMAP underpayments to drivers who recorded more than the anticipated mileage - and now we are looking at a serious sum of money lost to the company.

“When it comes to cutting back in times of economic recession, plugging those leaks should take priority well ahead of chopping overhead budgets elsewhere within the business.”



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